Uruguay (05/03)

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 (2002): 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 (2001)--74.8 yrs. (78.8 yrs. females; 70.9 yrs. males). Infant mortality rate--13.9/1,000.
Work force (1.2 million, 2002): Manufacturing--15%; commerce--20%; services (except banking)--43%; banking--2%; construction--8%; transportation and communications--6%; agriculture--4%; other--2%.

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), Nuevo Espacio New Space Party. Suffrage: Universal at 18.

Flag: Uruguay flag

Economy (2002 unless noted)
GDP: $12.3 billion.
Annual growth rate: -11.0% (2002); -3.1% (2001), -1.4% (2000).
Per capita GDP: $3,666.
Natural resources: Arable land, pastures, hydroelectric power, granite, marble.
Agriculture (9% of GDP): Products--beef, wool, rice, wheat, barley, corn.
Industry (16% of GDP): Types--meat processing, wool, textiles, leather, leather apparel, beverages and tobacco, chemicals, cement, petroleum refining.
Services: 70% of GDP.
Trade: Exports--$1.9 billion: meat, wool, hides, leather, wool products, fish, rice, furs. Major markets--MERCOSUR Southern Cone Common Market 33% (Brazil 23%, Argentina 6%, Paraguay 3%); European Union 24%; U.S. 7%. Imports--$2.0 billion: machinery, chemicals, fuel, vehicles. Major suppliers--MERCOSUR 48% (Argentina 28%, Brazil 20%); EU 18%; U.S. 8%.

Uruguayans share a Spanish linguistic and cultural background, even though about one-quarter of the population is of Italian origin. Most are nominally Roman Catholic, although the majority of Uruguayans do not actively practice a religion. 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 Spain. Emigration to the United States also rose recently. 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 conflicts between the British, Spanish, Portuguese, and colonial forces for dominance in the Argentina-Brazil-Uruguay region. In 1811, Jose Gervasio Artigas, who became Uruguay's national 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 a 3-year war. 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 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, characterized by repression and widespread human rights abuses. 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 democracy 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. Lacalle executed major structural economic reforms and pursued further liberalization of the trade regime. Uruguay became a founding member of MERCOSUR in 1991 (the Southern Cone Common Market, which includes Argentina, Brazil, and Paraguay). 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 2003.

The 1999 national elections were held under a new electoral system established by 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 Frente Amplio 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 in either chamber as did the Frente Amplio. The formal coalition ended in November 2002, when the Blancos withdrew their ministers from the cabinet, although the Blancos continued to support the Colorados on most issues.

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 telecommunications and energy companies. The economic recession has deepened since 1999, with Uruguay suffering contagion from a dramatic economic crisis in Argentina in 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 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 the 1999 election, the Frente Amplio won 40% of the seats in each chamber, the Colorado Party 33%, the National Party 22%, and the Nuevo Espacio Party 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.

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 the OAS--Juan Enrique Fisher

Uruguay maintains an embassy in the United States at 1913 I Street, NW Washington, DC 20006 (tel. 202-331-1313, fax 202-331-8142). Uruguay maintains consulates in Miami, Los Angeles, and New York.

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 February 2003, Uruguay has 1,754 soldiers deployed in 11 UN peacekeeping missions. The largest groups are in the Congo, where 1,549 Uruguayan troops control one sector of the country, and the Sinai, where 60 troops are stationed.

Uruguay's economy remains dependent on agriculture. Although agricultural production accounts for only 9% of the gross domestic product (GDP), agricultural-related products make up more than half of the country's exports. The industrial sector, which produces 16% of GDP, is largely based on the transformation of agricultural products. Leading economic sectors include meat processing, agribusiness, wool, leather production and apparel, textiles, and chemicals.

The Batlle administration has been confronted with serious economic problems. Devaluation in Brazil in 1999 made Uruguayan goods less competitive, and an outbreak of foot and mouth disease in 2001 curtailed beef exports to North America. Starting in late 2001, an economic crisis in Argentina undermined Uruguay's economy. Exports to Argentina and tourist revenues fell dramatically. In mid-2002 Argentine withdrawals from Uruguayan banks started a bank run that was overcome only by massive borrowing from international financial institutions. This, in turn, led to serious debt sustainability problems. In March 2003, the government started negotiating "voluntary" rescheduling of debt with bondholders, and signed a new agreement with the IMF that promised additional fiscal austerity.

In June 2002, the government eliminated its decade-long exchange rate band, allowing the peso to float freely. The dollar rose 60% against the peso in the second half of the year. While this made exports more competitive, a credit crunch following the banking crisis contributed to preventing economic recovery. The devaluation also lowered consumer purchasing power and increased inflation from about 4% in 2001 to 26% in 2002.

The government's strategy to stimulate growth is based on increasing exports, both to traditional partners in MEROCSUR and to the EU and North America. Uruguay enjoys a positive investment climate, with a strong legal system and open financial markets. It grants equal treatment to national and foreign investors and, aside from very few sectors, there is neither de jure nor de facto discrimination toward investment by source or origin.

Uruguay has traditionally favored substantial state involvement in the economy, and privatization is still widely opposed. Recent governments have carried out cautious programs of economic liberalization similar to those in many other Latin American countries. They included lowering tariffs, controlling deficit spending, reducing inflation, and cutting the size of government. The Lacalle administration implemented a 1991 state company reform law, though privatization was partially stalled when voters rejected the sale of the state telephone company, ANTEL, in a 1992 referendum.

A February 2001 law provides for demonopolization of telecommunications and creates the framework for regulatory offices for telecommunications and electricity. The government has demonopolized oil refining, but oil imports will remain a monopoly until 2006. In 2002, the oil company union and the leftist opposition gathered enough signatures to subject energy market liberalization to a public referendum. Other former state sectors have been partially liberalized, including insurance, mortgages, road construction and repair, piped-gas distribution, energy generation, water sanitation and distribution, cellular telephones, and airline transportation.

Uruguay traditionally has had strong political and cultural links with its neighbors and Europe. With globalization and regional economic problems, its links to North America have strengthened. Uruguay is a strong advocate of constitutional democracy, political pluralism, and individual liberties. Its international relations historically have been guided by the principles of nonintervention, multilateralism, respect for national sovereignty, and reliance on the rule of law to settle disputes. Uruguay's international relations also reflect its drive to seek export markets and foreign investment. It is a founding member of MERCOSUR. In June 1991, MERCOSUR and the United States signed the Rose Garden Agreement (also known as the "Four Plus One" Agreement). The agreement was non-operational until June 2001 when MERCOSUR invited the U.S. to discuss the feasibility of market access negotiations. 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.

Uruguay is a member of the Rio Group, an association of Latin American states that deals with multilateral security issues (under the Inter-American Treaty of Reciprocal Assistance). Uruguay's location between Argentina and Brazil makes close relations with these two larger neighbors and MERCOSUR associate members Chile and Bolivia particularly important. An early proponent of the Enterprise for the Americas Initiative, Uruguay has actively participated in the follow-up process to the periodic Summits of the Americas, especially the Free Trade Area of the Americas (FTAA). Often considered a neutral country and blessed with a professional diplomatic corps, Uruguay is often called on to preside international bodies. Most recently, Uruguay was selected to chair the FTAA and WTO agricultural committees and an Uruguayan presides over the WTO General Assembly. Uruguay also is a member of the Latin American Integration Association (ALADI), a trade association based in Montevideo that includes 10 South American countries plus Mexico and Cuba.

U.S.-Uruguayan relations traditionally have been based on a common outlook and emphasis on democratic ideals. Uruguay works closely with the United States bilaterally and internationally to foster economic growth, trade, and political cooperation. Under President Batlle, Uruguay has been particularly open to increasing ties with the United States. Improved trade ties, whether through a bilateral free trade agreement, MERCOSUR or the FTAA have been the Batlle administration's priority. In 2002, Uruguay and the U.S. created a Joint Commission on Trade and Investment (JCTI) to exchange ideas on a variety of economic topics. In March 2003, the JCTI identified six areas of concentration until the eventual signing of the FTAA in 2005: customs issues, intellectual property protection, investment, labor, environment, and trade in goods. More than 100 U.S.-owned companies operate in Uruguay, and many more market U.S. goods and services.

Uruguay cooperates with the United States on law enforcement matters such as regional efforts to fight drug trafficking and terrorism. It also has been very active in human rights issues, sponsoring UN resolutions on the human rights situation in Cuba in 2002 and 2003.

From 1999 through early 2003, Uruguayan citizens were exempted from visas when entering the United States under the Visa Waiver Program. This exemption was withdrawn on April 16, 2003, based on the high overstay rates for Uruguayans and worldwide national security concerns.

Principal U.S. Embassy Officials
Ambassador--Martin J. Silverstein
Deputy Chief of Mission--James W. Williard
Political/Economic Counselor--Oliver Griffith
Economic/Commercial Officer--Joyce S. Wong
Consul--Stephen Barneby
Chief, Management Section--David J. Savastuk
Public Affairs Officer--Jean Manes
Defense Attach�--LTC Albert Leftwich, USA
Chief, Office of Defense Cooperation--Col. Jerry Miller, 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.

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

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

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