Paraguay, Argentina trade row worsening

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ASUNCION, Paraguay, Sept. 15 (UPI) -- What began as a promising window of opportunity for Paraguay is deteriorating into a bitter political row as Argentina continues to block surplus electricity exports from Paraguayan power generators to Uruguay.

Weeks of negotiations, sometimes heated and verging on crisis, have failed to persuade Argentine President Cristina Fernandez de Kirchner to relent on the issue.

Landlocked Paraguay had suffered earlier as a result of disputes that, its officials said, were invented by Argentina mainly to assert its power beyond diplomatic niceties.

A row over river commerce cost Paraguayan traders several million dollars in lost business after Argentine authorities held up containers destined for Asuncion.

Argentine dock workers are still obstructing trade, causing further dislocation and losses, Paraguayan officials said.

Paraguay is bordered by Argentina to the south and southwest, Brazil to the east and northeast and Bolivia to the northwest. Paraguayan territory lies on both banks of the Paraguay River, which runs through the center of the country from north to south but over the years Argentina has wielded power over Paraguayan trade because of its geographical proximity.

The row started soon after the Paraguayan government negotiated a deal to sell surplus electricity to Uruguay. Argentine authorities, wanting a cut on the deal, immediately slapped a charge, arguing they deserved a greater share of Paraguay's revenue as they allowed Argentina's grid to be used for the transmission.

Several Argentine promises of a review of transit fees more comfortable to Paraguay have followed but none have materialized, Paraguayan officials said.

Paraguayan officials took their grievance to Parlasur, the legislative arm of the Mercosur regional pact, condemning Argentina for going against the spirit of the international organization that wants to see a more collaborative spirit among Mercosur members.

A Paraguayan delegation to Parlasur accused Argentina of systematic disregard of the treaty of Asuncion, corner of Mercosur cooperation.

Paraguayan delegation leader Alfonso Gonzalez called "obstinate and irrational" Argentina's opposition to the country's electricity exports to Uruguay.

Paraguay says the Argentine transit rate for the use of its electricity grid is four times the going regional rate -- $48 instead of $12 per megawatt per hour.

Paraguayan Energy Deputy Minister Mercedes Canese said she hadn't heard from Argentina after promises of a review of the "prohibitive" transit fee.

Paraguay has been complaining that not only Argentina but also Brazil have been engaged in unfair trade practices over the trade in electricity. Paraguay shares electricity production with Argentina and Brazil.

Although it is one of the largest net electricity producers in the world Paraguay has seen its electricity distribution hampered by regional rivalries.

Paraguay is also one of the few countries in Latin America that has maintained an integrated public monopoly on electricity. Hydropower comprises nearly 100 percent of electricity in the country, and 90 percent of generated energy is exported, with neighboring Argentina and Brazil receiving the majority.