Uruguay (04/02)

For the most current version of this Note, see Background Notes A-Z.


Oriental Republic of Uruguay

Area: 176,000 sq. km. (68,000 sq. mi.); slightly smaller than Oklahoma.
Cities: Capital--Montevideo (est. pop. 1.4 million).
Terrain: Plains and low hills; 84% agricultural.
Climate: Temperate.

Nationality: Noun and adjective--Uruguayan(s).
Population (2001): 3.4 million.
Annual growth rate: 0.6%.
Ethnic groups (est.): European descent 93%, African descent 5%, mestizo 1%.
Religions: Roman Catholic 52%, Protestant and other Christian 16%, Jewish 2%, nonprofessing or other 30%.
Language: Spanish.
Education: Literacy--97%.
Health: Life expectancy (2000)--74.5 yrs. (78.6 yrs females; 70.6 yrs. males). Infant mortality rate--14.1/1,000.
Work force (1.2 million, 2000): Manufacturing--16%; commerce (restaurants/hotels)--8%; services (except banking)--45%; banking--7%; construction--8%; transportation and communications--6%; agriculture--4%; other--4%.

Type: Republic.
Independence: 1825.
Constitution: First 1830, current 1967, most recently amended December 1996.
Branches: Executive--President (chief of state and head of government). Legislative--General Assembly consisting of a 99-seat Chamber of Deputies and a 30-seat Senate.
Judicial--Supreme Court of Justice.
Administrative subdivisions: 19 departments with limited autonomy. Political parties/coalitions: Colorado Party, Blanco (National) Party, Frente Amplio (Broad Front coalition), New Space Party.
Suffrage: Universal at 18.

Flag: Uruguay flag

Economy (2001 unless noted)
GDP (2001 est.): $18.5 billion.
Annual growth rate: -1.5% (2001 est.); 1998, -1.3% (2000).
Per capita GDP (est.): $6,000.
Natural resources: Arable land, hydroelectric potential, granite, marble.
Agriculture (6% of GDP): Products--beef, wool, rice, wheat, barley, corn.
Industry (17% of GDP): Types--meat processing, wool and hides, textiles, shoes, handbags, leather apparel, tires, cement, fishing, food and beverages, petroleum refining.
Services: 60% of GDP.
Trade: Exports--$2.1 billion (est.): meat, wool, hides, leather, wool products, fish, rice, furs. Major markets--MERCOSUR Southern Cone Common Market 42% (Brazil 21%, Argentina 16%, Paraguay 5%); European Union 18% (Germany 5%); U.S. 9%. Imports--$3.1 billion: machinery, chemicals, fuel, vehicles. Major suppliers--MERCOSUR 44% (Argentina 23%, Brazil 21%); EU 18%; U.S. 9%.

Uruguayans share a Spanish linguistic and cultural background, even though about one-quarter of the population is of Italian origin--most are Roman Catholic. Church and state are officially separated.

Uruguay is distinguished by its high literacy rate, large urban middle class, and relatively even income distribution. The average Uruguayan standard of living compares favorably with that of most other Latin Americans. Metropolitan Montevideo, with about 1.4 million inhabitants, is the only large city. The rest of the urban population lives in about 20 towns. During the past two decades, an estimated 500,000 Uruguayans have emigrated, principally to Argentina and Brazil. As a result of the low birth rate, high life expectancy, and relatively high rate of emigration of younger people, Uruguay's population is quite mature.

The only inhabitants of Uruguay before European colonization of the area were the Charrua Indians, a small tribe driven south by the Guarani Indians of Paraguay. The Spanish discovered the territory of present-day Uruguay in 1516, but the Indians' fierce resistance to conquest, combined with the absence of gold and silver, limited settlement in the region during the 16th and 17th centuries. The Spanish introduced cattle, which became a source of wealth in the region. Spanish colonization increased as Spain sought to limit Portugal's expansion of Brazil's frontiers.

Montevideo was founded by the Spanish in the early 18th century as a military stronghold; its natural harbor soon developed into a commercial center competing with Argentina's capital, Buenos Aires. Uruguay's early 19th century history was shaped by ongoing fights between the British, Spanish, Portuguese, and colonial forces for dominance in the Argentina-Brazil-Uruguay region. In 1811, Jose Gervasio Artigas, who became the Uruguay�s hero, launched a successful revolt against Spain. In 1821, the Provincia Oriental del Rio de la Plata, present-day Uruguay, was annexed to Brazil by Portugal. The Provincia declared independence from Brazil in August 25, 1825 (after numerous revolts in 1821, 1823, and 1825) but decided to adhere to a regional federation with Argentina.

The regional federation defeated Brazil after 3-year fight. The 1828 Treaty of Montevideo, fostered by the United Kingdom, gave birth to Uruguay as an independent state. The nation's first constitution was adopted in 1830. The remainder of the 19th century under a series of elected and appointed presidents saw interventions by--and conflicts with--neighboring states, political and economic fluctuations, and large inflows of immigrants, mostly from Europe. Jose Batlle y Ordo�ez, president from 1903 to 1907 and again from 1911 to 1915, set the pattern for Uruguay's modern political development. He established widespread political, social, and economic reforms such as a welfare program, government participation in many facets of the economy, and a plural executive. Some of these reforms were continued by his successors.

By 1966, economic, political, and social difficulties led to constitutional amendments, and a new constitution was adopted in 1967. In 1973, amid increasing economic and political turmoil, the armed forces closed the Congress and established a civilian-military regime. A new constitution drafted by the military was rejected in a November 1980 plebiscite. Following the plebiscite, the armed forces announced a plan for return to civilian rule. National elections were held in 1984; Colorado Party leader Julio Maria Sanguinetti won the presidency and served from 1985 to 1990. The first Sanguinetti administration implemented economic reforms and consolidated democratization following the country's years under military rule.

Sanguinetti's economic reforms, focusing on the attraction of foreign trade and capital, achieved some success and stabilized the economy. In order to promote national reconciliation and facilitate the return of democratic civilian rule, Sanguinetti secured public approval by plebiscite of a controversial general amnesty for military leaders accused of committing human rights violations under the military regime and sped the release of former guerrillas.

The National Party's Luis Alberto Lacalle won the 1989 presidential election and served from 1990 to 1995. President Lacalle executed major economic structural reforms and pursued further liberalization of trade regimes, including Uruguay's inclusion in the Southern Cone Common Market (MERCOSUR) in 1991. Despite economic growth during Lacalle's term, adjustment and privatization efforts provoked political opposition, and some reforms were overturned by referendum.

In the 1994 elections, former President Sanguinetti won a new term, which ran from 1995 until March 2000. As no single party had a majority in the General Assembly, the National Party joined with Sanguinetti's Colorado Party in a coalition government. The Sanguinetti government continued Uruguay's economic reforms and integration into MERCOSUR. Other important reforms were aimed at improving the electoral system, social security, education, and public safety. The economy grew steadily for most of Sanguinetti's term until low commodity prices and economic difficulties in its main export markets caused a recession in 1999, which has continued into 2002.

The 1999 national elections were held under a new electoral system established by a 1996 constitutional amendment. Primaries in April decided single presidential candidates for each party, and national elections on October 31 determined representation in the legislature. As no presidential candidate received a majority in the October election, a runoff was held in November. In the runoff, Colorado Party candidate Jorge Batlle, aided by the support of the National Party, defeated Broad Front candidate Tabare Vazquez.

Batlle's 5-year term began on March 1, 2000. The Colorado and National Parties continued their legislative coalition, as neither party by itself won as many seats as the 40% of each house won by the Broad Front coalition.

President Batlle's priorities have included promoting economic growth, increasing international trade, attracting foreign investment, reducing the size of government, and resolving issues related to Uruguayans who disappeared during the military government. His coalition government also has passed legislation authorizing the initial demonopolization of the state-owned telephone and gas distribution companies, moves which have been characterized by the left as "selling the state's heritage." These laws have been the targets of calls for referenda to block their implementation, in a populist tool used increasingly by the Frente Amplio to halt action by the government on various issues.

Batlle's term has been marked by economic recession and uncertainty, first with the 1999 devaluation of the Brazilian real, then with the outbreaks of foot-and-mouth disease (aftosa) in Uruguay's key beef sector in 2001, and finally with the political and economic collapse of Argentina in late 2001.

Uruguay's 1967 constitution institutionalizes a strong presidency, subject to legislative and judicial checks. The president's term is 5 years. Thirteen cabinet ministers, appointed by the president, head executive departments. The Constitution also provides for a bicameral General Assembly responsible for enacting laws and regulating the administration of justice. The General Assembly consists of a 30-member Senate, presided over by the vice president of the republic, and a 99-member Chamber of Deputies. In each house, the Broad Front has 40% of seats, the Colorado Party 33%, the National Party 22%, and New Space 4%.

The highest court is the Supreme Court; below it are appellate and lower courts and justices of the peace. In addition, there are electoral and administrative ("contentious") courts, an accounts court, and a military judicial system.

The armed forces are constitutionally subordinate to the president through the Minister of Defense. By offering early retirement incentives, the government has trimmed the armed forces to about 14,500 for the army, 6,000 for the navy, and 3,000 for the air force. As of November 2001, Uruguay has about 916 soldiers deployed in UN peacekeeping missions, with the largest groups in the Congo, where 806 Uruguayan troops control one sector of the country, and the Sinai, where 60 troops are stationed.

Principal Government Officials
President--Jorge Luis Batlle Iba�ez
Minister of Foreign Affairs--Didier Opertti
Ambassador to the United States--Hugo Fernandez Faingold
Ambassador to the United Nations--Felipe Paolillo
Ambassador to OAS--Juan Enrique Fisher

Uruguay maintains an embassy in the United States at 2715 M Street, NW, Washington, DC 20007 (tel. 202-331-1313, fax 202-331-8142). Uruguay maintains consulates in Miami, Los Angeles, and New York.

Uruguay's economy remains dependent on agriculture. Although agricultural production accounts for 6% of the gross domestic product (GDP), agricultural-related products make up more than half of the country's exports. The industrial sector, which produces 17% of GDP, is largely based on the transformation of agricultural products. Leading industrial sectors include meat processing, agribusiness, leather production, textiles, leather footwear, handbags, and leather apparel.

The government's strategy to stimulate growth and meet its debt service obligations is based on exports. Much of Uruguay's trade is with its fellow MERCOSUR members. Uruguay is committed to an open financial system and maintains an exchange rate that floats inside a 12%-wide band; the government intervenes in the exchange market to maintain a peso/dollar devaluation rate of about 2.4% per month.

Recent governments have carried out a cautious program of economic liberalization similar to that of many other Latin American countries. The program has included lowering tariffs, eliminating deficit spending, controlling inflation--reduced from 129% in 1990 to around 3.6% in 2001--and reducing the size of the once-bloated and inefficient government. The Lacalle government implemented a 1991 state reform law, though such efforts were partially stalled when voters rejected the sale of the state telephone company, ANTEL, in a 1992 referendum. The Government of Uruguay intends to foster economic efficiency through demonopolization and cutting red tape. A budget law approved on February 2001 provides for demonopolization of telecommunications, but basic telephony remains a monopoly. It also creates the framework for regulatory offices for telecommunications and electricity, and levels the tax treatment of public and private firms.

In 2001, the government demonopolized oil refining but oil imports will remain a monopoly until 2006. Previous administrations have given the private sector access to areas formerly reserved for the state such as insurance (except for worker's compensation), mortgages, road construction and repair, piped-gas distribution, water sanitation and distribution, cellular telephony and airline transportation. A law on energy sector reform that allows for the private generation of energy was approved in 1997. Transmission and distribution rights (wheeling rights) remain a state monopoly. According to a 2001 study by a well-known think tank, utility demonopolization would create 45,000 new jobs. Lukewarm public support for these policies, the Uruguayan public's traditional caution, and the fragmented political system suggest that such reform efforts will continue at a slow pace.

Uruguay has strong political and cultural links with the democratic countries of the Americas and Europe. Uruguay supports constitutional democracy, political pluralism, and individual liberties. Its international relations historically have been guided by the principles of nonintervention, respect for national sovereignty, and reliance on the rule of law to settle disputes. The government seeks export markets and foreign investment. Uruguay is a member of the Southern Cone Common Market (MERCOSUR) with Argentina, Brazil, and Paraguay. Chile and Bolivia are associate members. It is an active proponent of the Free Trade Area of the Americas (FTAA) process and is vice president of the FTAA agriculture group. Uruguay also is a member of the Latin American Integration Association (ALADI by its Spanish acronym), a trade association that gathers 10 South American countries plus Mexico and Cuba.

Uruguay also is a member of the Rio Group, an informal group of Latin American states that deals with multilateral regional issues. It is a party to the Inter-American Treaty of Reciprocal Assistance (Rio Treaty), the World Trade Organization, and the Latin American Nuclear-Free Zone. Uruguay's location between Argentina and Brazil makes close relations with these two larger neighbors and fellow MERCOSUR members particularly important. An early proponent of the Enterprise for the Americas Initiative, Uruguay has participated in the follow-up process to the 1994 and 1998 Summits of the Americas.

In June 1991, MERCOSUR and the United States signed the Rose Garden Agreement (also known as the "Four Plus One" Agreement). The agreement was nonoperational until June 2001 when MERCOSUR invited the U.S. to discuss the feasibility of market access negotiations. Uruguay fostered the invitation using its condition of protempore president of MERCOSUR. The first U.S.-MERCOSUR meeting was held on September 24, 2001, and resulted in the creation of four working groups (on industrial trade, e-commerce, agriculture, and investment).

U.S.-Uruguayan relations traditionally have been based on a common outlook and emphasis on democratic ideals. Uruguay works with the United States bilaterally and internationally to foster economic and political cooperation and to improve regional cooperation. Under President Batlle, Uruguay has been uncharacteristically open to increasing ties with the United States; forging both a bilateral trade agreement and a Four Plus One free trade agreement between MERCOSUR and the U.S. has been a focus of Batlle's administration. Batlle also has attempted to position himself as the interlocutor between Argentina and the United States during Argentina's political and economic crisis that began in December 2001. More than 100 U.S.-owned companies operate in Uruguay, and many more market U.S. goods and services. The Uruguayan Government cooperates with the United States on law enforcement matters such as regional efforts to reduce drug trafficking and terrorism.

In 2001, President Batlle and President Bush created a U.S.-Uruguay Joint Economic Council (JEC) to exchange ideas on a variety of economic topics, including multilateral, regional and subregional issues, as well as shared bilateral issues. The JEC held its first meeting in Montevideo in July 2001. The Council has five working groups on trade, investment, e-commerce, agriculture, trade promotion and strategic alliances, and banking and finance.

As of February 2002, Uruguayan citizens are not required visas when entering the United States as a Visa Waiver Program was granted to Uruguay in 1999.

Principal U.S. Embassy Officials
Ambassador--Martin J. Silverstein
Deputy Chief of Mission--Marianne M. Myles
Political/Economic Counselor--Paul Belmont
Commercial Attach�--Joyce S. Wong
Consul--Steven Barneby
Chief, Administrative Section--Michael St. Clair
Public Affairs Officer--Jean Manes
Defense Attach�--LTC Albert Leftwich, USA
Chief, Office of Defense Cooperation--Col. Randy James, USAF

The U.S. Embassy in Uruguay is located at Lauro Muller 1776, Montevideo (tel: 598-2 418-7777; fax: 598-2-410-0022). The mailing address for the embassy is UNIT 4500, APO AA 34035. The embassy also has an Internet web page at http://www.embeeuu.gub.uy/.

Other Contact Information
U.S. Department of Commerce
Trade Information Center
International Trade Administration
14th and Constitution Avenue, NW
Washington, DC 20230
Tel: 800-USA-TRADE
Home page: http://www.ita.doc.gov

American Chamber of Commerce in Uruguay
Plaza Independencia 831, Oficina 209
Edificio Plaza Mayor
11100 Montevideo, Uruguay
Tel: (5982) 908-9186
Fax: (5982) 908-9187
E-mail: amcham@zfm.com