By Daniel Schweimler BBC News, Buenos Aires

Popular opposition to the mills is strong in Argentina

Uruguay wants to build the mills on the bank of the river that separates the two nations.

Argentina and international environmental organisations say the mills will pollute the river.

Uruguay says they meet international standards and will bring the region much-needed work and investment.

The conflict over the construction of the paper mills has been going on for some weeks and is straining relations between these two normally friendly countries.

A Finnish and a Spanish company want to invest $1.7bn (�953m) in the two pulp mills, bringing much-needed foreign investment and jobs to Uruguay.

But the residents on the Argentine side of the Uruguay river, backed by international environmental organisations including Greenpeace, say the factories will pollute the river and deter tourism.

Tensions

Thousands of residents regularly block the bridges connecting the two countries and activists have been arrested.

Relations between the governments in Buenos Aires and Montevideo have become increasingly tense and suggested solutions like moving the factories to another site have been rejected.

Activists are protesting against the paper mills

Now Argentina is saying that Uruguay has broken international treaties over the management of the river and will take the case to the International Court of Justice in The Hague.

Uruguay resents what it sees as interference from its larger neighbour. Montevideo and the owners of the two factories say all the international anti-pollution regulations are being adhered to.