- The Washington Times - Monday, May 23, 2005

COLONIA, Uruguay - In his opening weeks as Uruguay’s first socialist president, Tabare Vazquez has mirrored the economic orthodoxy of his centrist predecessor while making populist political gestures, especially to labor unions and the poor.

Mr. Vazquez, 65, an oncologist, heads the leftist coalition Frente Amplio (Broad Front, in Spanish). He was sworn in March 1, ending 180 years of two-party rule.

His election in October produced an epidemic of euphoria in this town and throughout the tiny nation of more than 3 million. It also bolstered the so-called “pink tide” of leftist governments taking power in several Latin American nations disillusioned with U.S. policies and the Bush administration’s preoccupation with war and terrorism.

Coalition widens role

The political groundswell that propelled Mr. Vazquez to the presidency spread his coalition’s reach into rural provinces. This month, local elections catapulted Frente Amplio leaders to power in eight provinces, leaving Uruguay’s traditional parties — the Colorado and the National parties — in charge of the 11 other provinces. Before that, the Colorado and National parties ruled all but one of Uruguay’s 19 provinces.

Leading a party that includes Marxist Tupamaro guerrillas who battled the Uruguayan state in the 1960s and ‘70s, Mr. Vazquez began his term by reactivating diplomatic ties with Cuba that had been cut by President Jorge Batlle, a Washington ally from the centrist Colorado Party.

Political observers say Mr. Vazquez’s symbolic gesture to Fidel Castro indicates the likely tone of future relations with the United States, which they think will be more distanced than Mr. Batlle’s, but nonetheless amiable.

Return to tradition

“I foresee a return to the mainstream foreign and trade policy Uruguay had before the Batlle administration, which was more an exception than the rule,” said Ernesto Talvi, director of the Center for the Study of Research and Social Affairs (CERES) in Montevideo.

“You won’t see anything remotely similar to an alignment with more extremist or populist elements. We are going to revert to a more traditionally Uruguayan style — that is, gradual policies and moderate conduct of foreign policy, with an eye to regional arrangements and closer ties to Europe.

Mr. Batlle favored the U.S.-backed Free Trade Area of the Americas (FTAA), but Uruguayan political observers say Mr. Vazquez will steer foreign and trade policy through Mercosur, the regional economic bloc comprising Argentina, Brazil, Paraguay and Uruguay.

TV venture backed

“This will mean that, to some degree, Vazquez will be more distant from the United States than was Batlle,” said Nestor Gandelman, director of the department of economics at ORT University in Montevideo, the second-largest higher-education institution in Uruguay.

Larry Birns, director of the Washington-based Council on Hemispheric Affairs, cited Uruguay’s support of Telesur, a South American television venture pushed by Venezuelan President Hugo Chavez, as evidence that Mr. Vazquez’s foreign policy will be “venturesome.” However, Mr. Birns said Uruguay ultimately will not take a confrontational stance toward Washington.

Fiscal orthodoxy backed

In October, Mr. Batlle signed a bilateral investment treaty with the United States intended to boost trade between the two countries, which in 2003 was $582 million. U.S. exports to Uruguay that year totaled $326 million, a 57 percent rise from 2002, while Uruguayan imports, principally agricultural products, amounted to $256 million.

Mr. Vazquez has promised to respect the agreement and has held to Mr. Batlle’s orthodox economic lines, committing his government to debt-reducing fiscal and monetary policies that helped it reach a new agreement in April with the International Monetary Fund.

Some say the president had little choice.

Huge debts due soon

“Uruguay has a huge amount of [loan replacements] coming due in 2005 and 2006 with multiple institutions, and a new agreement was needed to roll over those obligations,” said Mr. Talvi, the CERES director. “The alternative to orthodoxy in this case was financial chaos.”

Mr. Vazquez has distinguished himself from Mr. Batlle socially and polished his populist reputation by creating a $100 million emergency program of conditional subsidies for families mired in poverty that deepened during Uruguay’s economic recession from 1999 to 2002.

The Social Emergency Plan offers a monthly subsidy for up to two years and requires, among other things, school attendance and medical checkups for children, as well as some community work.

Transparency stressed

Mr. Vazquez has given new clout to labor unions, putting labor leaders in some key administration posts and aiding what observers say is a rise in new unions. He also has pushed transparency measures to detect past improprieties at government enterprises and made public gestures in the area of human rights.

On April 19, he sent forensic teams to military bases in search of citizens suspected of having been killed by the military dictatorship that ruled Uruguay from 1973 to 1985.

But his problems are deep, observers say.

Jorge Barrera, a former Colorado Party lawmaker who serves on the party’s executive committee, says the Vazquez administration’s leadership is suffering from internal contradictions, with some ministers pushing differing agendas. His comments were echoed by other observers.

Spending curbs likely

“There has been too little time to tell, but so far I have seen more talk than action,” said Mr. Barrera. “But the good news is they haven’t changed the economic direction. Faced with large public-sector employment and retiree populations, Vazquez will have to constrain public spending, which could cause problems with labor unions, strong political allies that are pushing for salary increases.

“There are restrictions on how much you can raise salaries when you consider that Uruguay has 200,000 public servants and 600,000 retirees, all of whom get their income from the government,” said Mr. Gandelman, the economics department head at ORT University, who stressed that this was his opinion, not the university’s.

“They need to be supported from taxes, but there are only 1.2 million people actively employed in the private sector,” he said.

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