The argument never mentions fines, and definitely doesn’t depend on them. There’s also no reason for us to think that this is the only possible way for Country X to reduce its level of pollution problems.

This is irrelevant. The argument isn’t concerned with countries surrounding Country X, and in fact specifically talks about pollutants leaching from dumps and landfills, rather than air and water pollution generally.

In other words, Country X will move out of the “danger zone” of development where it’s producing pollutants but can’t yet deal with them. If we were to negate this, and assume instead that Country X wouldn’t increase development, the argument would fall apart.

First, the argument strongly implies that Country X has already begun the process of industrial development. Second, we know that starting industrialization increases pollution problems. So this just contradicts the argument.

The argument is just saying that Country X will reduce its level of pollution problems. How the severity of those problems compares to other countries is irrelevant.