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Petro's victory in Colombia, Gabriel Boric's government in China, the possible return of
Lula in Brazil and the arrival of Pedro Castillo to power in Peru.
Latin America is once again immersed in a huge wave of political change.
A change that clearly bets on the resurgence of left-wing parties and politicians.
A new left, apparently much less radical and much more social-democratic than the one we
knew as the so-called Socialism of the 21st century.
But...
What if I told you that we could find a tiny exception?
A small one among giants that is turning the other way and that aspires to become a model
for the future of Argentina.
Do you know which country I am referring to?
3, 2, 1....
Exactly, we are talking about Uruguay.
("The success of a ruler is not measured in the reflection of a mirror, it is measured
in the reflection of each one of the Uruguayans and the people who live in the country.
If people look at themselves in the mirror when our government term ends and are freer,
the government is successful, if not, we will have failed, for me, fundamentally.
Luis Lacalle Pou, President of Uruguay)
The story we are looking at today began on Sunday, 27 October 2019.
On that day, as happens every five years, presidential elections took place in Uruguay.
And we are not talking about just any elections.
For the first time in 15 years there was an alternation in power.
On that day, the Frente Amplio, the leftist coalition that had been governing Uruguay
since 2004, was defeated.
A defeat that, in all fairness, was by a narrow, a very narrow margin.
You see, after coming in second and a long way behind the Frente Amplio in the first
round and with the memory of the second round defeats of his father in 2009 and of himself
in 2014, Lacalle Pou [PRON: La-ca-yey Po-oo] finally won power by a very narrow margin
of little more than a point and a half.
A mere 37,000 votes were enough to turn Uruguay's politics upside down.
Now, what made Uruguayan voters decide to go for Lacalle Pou?
Why did this 180-degree turnaround happen?
What does it mean in the Latin American political context?
And the most important question of all: More than enough time has passed since the election,
so the question we are all wondering is: How has Uruguay changed since then?
Well, let's take a look.
(THE NEW POPULAR MANDATE)
What brought Lacalle Pou to power after 15 years of political domination by the Frente
Amplio?
What exactly did the current president of Uruguay come up against?
Well VisualPolitik fans, in order to answer this question we have to go back to 2019.
At that time we can highlight three major issues that concerned and even threatened
the future of the country.
First of all, there is the issue of security.
You see, Uruguay has always been a relatively safe country, but that began to change in
2011.
In the following eight years the homicide rate practically doubled, and something that
had never been a noteworthy concern – security – began to become one of the key issues
on the political agenda.
The situation was getting so bad that some sectors even began to call for the armed forces
to take control of internal security to the detriment of the police.
(3 February 2019: Lack of security, the issue that worries Uruguay the most ahead of the
elections.
InfoBae)
(25 March 2019: Concern over record increase in murders and violent robberies in Uruguay.
Homicides grew by 45.8% and violent robberies by 53.5% in the last year.
Infobae)
But that was not all.
Secondly, after 15 years of Frente Amplio's redistributive policies, the economy was exhausted,
practically kaput.
For example, Uruguay's economic growth went from 4.6% in 2013 to zero growth in 2019;
poverty had begun to grow and the public deficit had soared to almost 5% of GDP.
One of the biggest budget slippages in Uruguay's entire history.
To top it off, increasing regulations and ever more government intervention caused the
country to fall to 101st place in the World Bank's Doing Business ranking.
In other words, the fear that the "Argentine disease" would take its toll on the country
was more real than ever.
And finally we have one of the most common epidemics in all Hispanic countries: corruption.
To give you an idea, the vice-president of the country himself, Raul Sendic, was accused
of corruption.
Accusations for which he was ultimately convicted in 2021.
Lack of security, economic stagnation and corruption: three ingredients that together
spell one outcome: institutional degradation.
Yes, in 2019 Uruguay was one of the best countries in Latin America in economic, political and
social terms.
But things were simply not going in the right direction.
And right at that point, Lacalle Pou appeared with a very clear message: to make a 180-degree
turn in the country's policies.
And, VisualPolitik fans, that was none other than the reason that allowed him to defeat
the Frente Amplio.
The promise of building a new Uruguay.
Of course, it is one thing to win elections and quite another to have a blank check.
The small margin with which it won the elections has forced the government to depend on a complex
5-party alliance in order to achieve a majority in Congress, both in the House of Representatives
and in the Senate.
It is known as the "Multicolor Coalition", of course you can imagine that beyond the
name, keeping five parties united is not always an easy task.
And of course it is something that forces you to keep everyone happy.
In other words, to agree on any reform requires a lot of dialogue and negotiation.
To top it all off, coming to power in 2019 and suffering a pandemic in 2020...
That's all, how shall I put it?
It's a real pain in the ass.
You come to power and before long your political and economic priorities change completely.
All in all, Lacalle Pou's government has managed to introduce important changes in the country.
These changes are radically different from what is being done in practically all the
countries of the region and in some cases may end up provoking an enormous political
clash with neighboring countries.
Do you want to know what we are talking about and how the Land of the Charrua [PRON: Cha-rroo-a]
is changing?
Well...
Listen up.
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(REBUILD URUGUAY)
Pay close attention to the following news item:
("Uruguay, Bahamas and Portugal: the countries chosen by Argentines for their tax benefits.
Infobae)
Obviously Uruguay is far from being a tax haven, but it does have much better conditions
than Argentina, especially if the income comes from abroad.
And above all, what has improved are the prospects for the future, which is particularly important
when you want to put your savings aside for safekeeping, don't you think?
And of course, things like this help a lot:
(8 September 2020: Uruguay approved "tax vacations" for 10 years for foreigners obtaining residency.
InfoBae)
(7 October 2020: More benefits in Uruguay: Lacalle Pou approved a tax relaxation for
companies that settle and invest in that country.
InfoBae)
However, of all the reform processes that the Uruguayan government has implemented in
recent years, there is one that stands out above the rest:
I am referring, of course, to the Law of Urgent Consideration, LUC for those who know.
We are talking about a very long law that, with 476 articles, deals with all kinds of
issues: from the economy to education, including communications services.
It is the government's great transformation project.
And take note because after its approval, an appeal by the Frente Amplio meant that
a large part of the changes had to be submitted to a referendum...
And once again the Uruguayans, again by a narrow margin of just two points, voted in
favor of the reforms.
(The Uruguayan Executive comes out strengthened after a referendum that keeps the country
divided.
EFE)
(Uruguay: with a narrow margin, the Government wins a key referendum for its administration.
By only 22,000 votes, the majority of Uruguayans backed the option not to repeal 135 of 476
articles of the so-called Law of Urgent Consideration (LUC), promoted by President Luis Lacalle
Pou.
France 24h)
Now, what exactly does this LUC say?
What are its most salient changes?
Among the main reforms we can find:
In economic matters, a ceiling has been set on the growth of public spending and a limit
on the level of debt, as well as the creation of a Fiscal Council to evaluate the different
public spending projects and to try to avoid political waste.
In labor matters, from now on, when a strike day occurs, the right of employers and employees
to work if they so wish will be expressly recognized.
Until now, even if a worker did not want to join a strike, the so-called passive freedom
of association of 2006 could prevent him or her from working on that day.
Along the same lines, the LUC also declares pickets that impede the free movement of people,
goods or services, both in public and private spaces, to be illegitimate and illegal.
In other words, you can go on strike but you cannot force others to go on strike, nor can
you stop the country.
Then, in terms of security, the law broadens the circumstances and places in which both
civilians and police can resort to self-defense, and in terms of housing, a new voluntary rental
regime is introduced that reduces the rights of tenants.
This regime recognizes, for example, faster evictions in case of non-payment.
The idea is that more landlords will put their properties on the market and this will bring
down prices.
Well, these are just some of the many changes with which Lacalle Pou's government wants
to turn the tide in Uruguay.
Now, the next step seems to be the tricky reform of social security after a commission
of experts in 2020 will confirm what is already an open secret:
With the aging of the population, the public social security system as it is set up in
Uruguay is unviable.
To give you an idea, social security expenditure in Uruguay is similar to that of Spain and
even higher than that of wealthy countries such as Denmark or Norway.
So it is time to get down to work.
Anyway, with all that we have seen, what do you want me to say?
You may take or leave the current Ecuadorian government, but VisualPolitik fans, I think
one thing is clear: they are nothing like what is happening in the rest of Latin America.
But wait a moment, we are not finished yet.
Another key, fundamental and completely disruptive bet of this government has a lot to do with
foreign policy and especially with Mercosur.
We are talking about a gamble that may end up doing no less than making Montevideo send
Buenos Aires and Brasilia to hell.
Listen up!
(A NEW PATHWAY TO THE WORLD)
Take a look at this statement of intent:
("My duty as a Uruguayan is to ask the world to open up to me, because if you open up the
world to us, we will walk safely".
Luis Lacalle Pou, President of Uruguay)
VisualPolitik viewers, since his arrival to power, Lacalle Pou has understood that above
all there is something that does not work in this region of the world.
Something we have told you about many times on VisualPolitik:
The import substitution policy and the rampant protectionism that characterizes these countries.
So, no sooner said than done, to Argentina's annoyance – you will understand why later
– the new government of Uruguay was faced with three important foreign policy challenges
as soon as it came to power:
Firstly, make it more pro-market.
Secondly, to contribute to making Mercosur more flexible.
And thirdly, to facilitate the arrival of more foreign direct investment in the country.
Well, that and also to put all populist chieftains in the region on the same footing.
That is, clearly condemning the regimes in Cuba, Nicaragua and Venezuela.
But let's not get sidetracked.
Let's focus on what has been the Uruguayan government's big gamble in foreign affairs.
Take a look:
("Uruguay needs to open up to the world [...] If they accompany us, fine; if not, we go alone"
Luis Lacalle Pou, President of Uruguay)
(On Mercosur: "We are in the boat, we have to think about who is the cargo.
We want to move forward and we are going to do it.
[In Uruguay] We are trying to negotiate with China, Turkey, with the United Kingdom" Luis
Lacalle Pou, President of Uruguay)
So it’s crystal clear.
The current Uruguayan government is clear that in order to secure more investment and
economic growth, the country has to open up to the world.
The problem is that at the same time it wants to negotiate new trade agreements.
Uruguay belongs to Mercosur and this limits its room for maneuver.
Which explains news like this:
(Uruguay's rebelliousness strains Mercosur to the maximum.
El País)
We have also told you on VisualPolitik, the Southern Common Market, Mercosur does not
work, at least not as it should.
This institution was supposed to promote trade in South America, however with a common external
tariff that more than doubles the global average and certain limitations when negotiating with
third countries.
So in practice this agreement works more like a protectionist barrier.
For this reason, the Lacalle Pou government has launched a political war to make the bloc
more flexible, reduce the common external tariff and allow member countries to negotiate
trade agreements with third countries on their own.
This is something that Mercosur's current regulations prevent.
Of course, so far the results have not been at all positive.
Buenos Aires, above all, continues to insist that this bloc be what it is today: a sort
of closed box that instead of encouraging trade slows it down.
[Well, you understand by now the aversion Argentine politicians have to free trade and
globalization.]
The lack of real interest in moving forward with the free trade agreement with the European
Union is a good example of this.
Now the point is that Uruguay is close to signing a free trade agreement with China
and probably with other countries as well...
And China alone already weighs more in Uruguay's export basket than its Mercosur neighbors.
Does this mean that the land of the "charrua" could end up leaving Mercosur?
It does not seem that straightforward because its bloc partners still dominate imports...
But if things continue like this in the future, it would not be out of the question.
The world is much bigger than Mercosur.
In fact since 2019, the weight of exports in GDP that had been falling since 2014 has
started to grow again, and in 2021 although the external balance remained negative, it
had its second lowest level of the last 12 years.
It was only improved by the extraordinary figure of 2020 when imports collapsed due
to the pandemic.
And what does this all mean?
Well, it is not just a simple stubbornness of the president.
The foreign market is very, very much in Uruguay's favor.
And in fact, exports soared in 2021 and are doing the same in 2022.
Now the global food crisis triggered by Russia's invasion of Ukraine promises to boost exports
even further.
And if Lacalle Pou's plans come to fruition, it is clear that the foreign sector will play
a key role in Uruguay's economic future.
So there you have it.
Ultimately, despite the pandemic, the economy has improved, unemployment is about to break
its most positive record in seven years, poverty is contracting and crime is down substantially.
Much remains to be done, but the data are clear, today things in Uruguay seem to be
on the right track, at least on a better path than the one they were on in 2019.
And that in a region full of problems is a breath of fresh air.
This is perhaps what explains why Uruguay is practically the only exception to the shift
to the left that is taking place throughout Latin America.
The question now is, can the reforms promoted by Lacalle Pou become a model for countries
such as Argentina?
How far will the changes promoted by the current president of Uruguay go?
Will Uruguayans re-evaluate this reform path in the 2024 elections?
These are the questions and in this case, yours are the answers.
If you like, leave us your impressions in the comments and let's open a debate.
And as always, if you found this video interesting, don't forget to like and subscribe to VisualPolitik.
Once again thank you very much for being there.
All the best and see you next time.