Program accentuates the positive
BUFFETED BY THE STORMS THAT HAVE AFFECTED ITS LARGER NEIGHBORS, ONE OF THE CONTINENT'S USUAL OASES OF STABILITY HAS KNUCKLED DOWN TO A RIGOROUS SET OF ECONOMIC MEASURES THAT ARE DESIGNED TO RESTORE IT TO FINANCIAL HEALTH

LONG USED to being an oasis of stability and relative affluence in Latin America, Uruguay has had to cope with the harsh reality of recession for the past three years, largely through no fault of its own. Celebrating its Constitution Day today, it is a tiny nation of just three million people sandwiched between Argentina and Brazil. It cannot remain immune to problems occurring in either of those nations, let alone both.

First, in 1999 there was the devaluation of the Brazilian real, which undermined the competitive advantage of Uruguayan exports to Brazil. Then the Argentinian financial crisis came along, which had an immediate effect on the number of Argentinian business visitors and tourists going to Uruguay. The results have been predictable, with a slowdown in several, though not all, sectors of the Uruguayan economy, higher unemployment and so on.
However, the center-right coalition government that runs the country has responded to the challenges soberly, bringing in a number of austerity measures, and keeping on the right side of international financial institutions and important allies, including the United States. At the end of May, the parliament in Montevideo gave final approval to President Jorge Luis Batlle’s plan to raise taxes as a way of avoiding high budget deficits, as well as
bolstering the banking system.

President Batlle, whose father and great-uncle also held their country’s highest office, stresses Uruguay’s solid foundations. “As early as 1875, we had free, compulsory and universal primary education,” he points out. “We were able to be a strong country, with real social justice, and many well-utilized resources. Of course, we were a young country, and very imitative of Europe, copying both the good and the bad.”
Montevideo still has a distinctly European air, in both its buildings and its people, many of whom are of Italian or Spanish descent. But in the 1990s, following the re-democratization of the region after a period of military dictatorship, Uruguay got together with its neighbors, Argentina, Brazil and Paraguay, to form a regional trading group, Mercosur, which has its headquarters in Montevideo. This was a logical development, given the regionalization process going on elsewhere in the world.

However, there are problems with putting too many eggs in one basket. “As a consequence, we, a little country, first lost 60 percent of our trade with Brazil, and then 60 percent of our trade with Argentina,” President Batlle laments. “That means that we have started looking for other trading partners, without losing those we already have.”
Strengthening ties with the U.S. is a top priority. Over the past few months, Mr. Batlle has met George W. Bush twice, as well as other senior figures in the Bush administration, and business leaders. The reception has been distinctly cordial.

DIDIER OPERTTI BADAN Minister of Foreign Affairs

Nonetheless, as Foreign Minister Didier Opertti Badán underlines, economic considerations are at the fore. “We are not selecting markets in accordance with any ideological perspective or political doctrine,” he says. “Rather we are seeing where our products can gain access.”
Mr. Opertti believes that the American view of Uruguay is essentially positive. “I think the United States sees us as an orderly country, institutionally coherent and with a strong base rooted in the rule of law,” he says. “Our judiciary is independent and not corrupt. We are a predictable country; people know that we are not going to see great catastrophes or floods here.”
The fact that Uruguay has strongly backed President Bush’s line on international terror, as well as siding with Washington on various issues inside the World Trade Organization, has also undoubtedly contributed to the warmth in bilateral relations, and has made the U.S. sympathetic to Uruguay’s temporary need for financial help.

ALBERTO BENSION Minister of Economy and Finance

As has the Uruguayan government’s commitment to further free market reforms. “We are introducing various reforms in the public sector, to ensure a larger participation by the private sector,” confirms Alberto Bensión, the Minister of the Economy and Finance. “For example, we are opening up the long-distance telecommunications market.”
He adds: “We have an economic program in which we believe, and which is beginning to bear fruit. This is not something we are going to fully accomplish during the course of this year, but I believe that towards the end of the year, or the beginning of next, we will be in a position to change the somewhat negative perception that has entered the minds of certain players in the international market.”