Martin Garcia Canal update: Uruguay will receive Riovia’s bid, Argentina will not

After a tense week in Uruguay’s relations with Argentina over dredging the Martín García canal, the delegates of the Río Plate Administrative Commission meet Monday 7.30 to review the proposals from business interested in taking over maintenance of the canal.

Sources within the Uruguayan foreign ministry told La Diaria that Argentina’s unilateral decision to exclude Riovia from the tender exhausted the patience of the Uruguayan authorities, who understand that the Argentinians “are desperate” and they want “to wash their face”.

According to the Foreign Relations Ministry, Uruguay has always acted with “transparency and seriousness” and it was Argentina who asked for an audit and who claimed that they would make CARP’s minutes public, in which they discussed the alleged bribe, and then later did not release them because the same Argentinean government did not permit it.

“Now they are desperate to clean their faces and expunge guilt associated with Riovia”, reported the foreign ministry source.

It will be Monday at 2:00pm when both CARP delegations meet in Buenos Aires to open the bids from the four prequalified canal maintenance companies. The President of the Uruguayan delegation will also receive Riovia’s bid, although Argentina will not.

Days after the Argentinean foreign minister Hector Timerman sent a letter to his Uruguayan counterpart, Luis Almagro informing him that the Argentinean government had decided to revoke Riovia’s prequalification following the Uruguayan Court of Auditor’s investigation into alleged bribery by the firm.

Uruguay understands that arbitrarily excluding Riovia from the bidding could expose both countries to multi-million dollar lawsuits under treaties signed by both Uruguay and Argentina for the protection of investments.

Riovia has already announced that it is studying how to react to being excluded from the tender.

Although Argentina has proposed suspending Riovia from bidding today, they know the Uruguayan delegation will not permit it. Argentinean representatives will not review Riovia’s proposal but the Uruguayan delegation will in order to “cover themselves” in the case of an eventual law suit.

This Uruguay Business Reports news article is at translation of an article that appeared in the Uruguayan newspaper El Observador. The original article is available here. Uruguay Business Reports translation by Donovan Carberry.

Opinion in translation: Scandal in the Martín García Canal

The [Uruguayan] government has been trapped in a tangled defeat on the issue of dredging the Martín García canal. It is not the bilaterally postponed dredging of the Martín García canal, committed to a few days ago in Montevideo by the Argentinean foreign minister Héctor Timerman and immediately locked in by their representatives in the Río de la Plata Adminstrative Comission (CARP), in a swift demonstration of the almost habitual hostility of the Kichner government towards Uruguay. The more serious issue is the scandal surrounding the renewal of the contract with Riova [a subsidiary of the Dutch company Boskalis International B.V.] for maintenance dredging in the middle of well founded claims of corruption. The questionable contract renewal was accepted by [the Uruguayan] government, causing millions of dollars in damage to the country.

The canal dredging is essential for larger ships to operate from the port serving the majority of our exports Nueva Palmira, the second biggest             port in the country. Argentina has delayed this work for years, in order to protect the competitiveness of their ports which use the other canal, the Mitre, to move Argentinean products. After the meeting with Uruguayan foreign minister Luis Almagro, Timerman assured him that the issue was solved and that finally he would call for the immediate bidding on the Martín García canal. Less than a week later, the Argentinean delegates in CARP put sticks in the wheel by requiring bureaucratic steps causing a new set of delays.

But not even this new blow is the worst of the story. While they were rejecting open bidding and postponing the dredging of the canal Argentina promoted the renewal of the current CARP maintenance dredging contract with Riovia at along with an increase from $12 million USD to $15 million USD in the annual fee paid by both countries. The additional cost was uselessly opposed by the Uruguayan delegation which had established on technical grounds that any increase should not exceed $1 million USD. The embarrassing final wound was the absurdity that CARP never even considered offering the contract to the other Dutch company, Van Oord, who offered to take over the dredging for $9 million USD, six less that what CARP  generously conceded to Riovia under Argentinean pressure.

The CARP decision has been followed by reports of giant bribes from Riovia, who will remain in charge of the work until whatever day CARP calls for open bidding to assign dredging and maintenance on the canal, something that could take two more years. Moreover given the level of corruption that permeated the whole episode it is unbelievable that [the Uruguayan] government could accept the Argentinean impositions in favor of Riovia without any apparent justification, just following head down behind the Kitchener regime and the irregularities of their representatives. A Uruguayan diplomat informed CARP and our foreign minister that he had been offered a million dollar bribe to support Riovia, something that Almagro failed to report as he should have. The foreign minister is trying to clear the confusion in the [Uruguayan] Parliament, which has convened to investigate this case. But it will be difficult to erase what appears to be a painful official setback.

This article appeared as an editorial in the Uruguayan newspaper El Observador. The original article (in Spanish) can be viewed here. Translation by Donovan Carberry.