Uruguay, a country whose name has often been synonymous with obscurity, will host its runoff presidential election on November 30, with incumbent President José Mujica vacating his seat to one of two candidates: Tabaré Vázquez or Luis Lacalle Pou. Voting in one of its closest elections since the establishment of its current regime, Uruguay is facing a fork in the road: the Broad Front Party’s Vázquez and the continuation of a state-guided economy, or the National Party’s Lacalle Pou and the adoption of a more conservative, smaller government that will further open the country up to international free trade.
Preliminary polling data has the two rivals locked in a dead heat for the runoff election. Lacalle Pou is expected to gain the support of the right-wing Colorado Party, which had backed Pedro Bordaberry in the first round of presidential voting. To further complicate political predictions, this election includes approximately 250,000 new, highly unpredictable young voters who do not depend on print media or the radio, the dominant news mediums in Uruguay, instead relying on the Internet as their main source of news. As a result, gauging their political preferences is proving difficult in the weeks leading up to the runoff.
Reform and Progress
After a decade of strong growth, Uruguay is currently in a unique position to either step onto the international stage as an example of a self-sustaining Latin American economy or to falter and prove cynics of state-led development correct. In 2002, economic crises in Argentina and Russia dragged Uruguay into a severe economic recession, causing the country’s GDP to plummet by 20 percent, a bank holiday that catalyzed massive riots, and very slim odds of recovery. However, against all expectations, the Uruguayan economy was able to rebound. Learning from Argentina, Uruguay decided against the International Monetary Fund’s suggestion to default on its debt and convert bank deposits into bonds, choosing instead to establish a deposit-banking plan to back dollar deposits by 100 percent in order to restore confidence. The result has been consistent economic growth from 2004 through the present day. In 2014, Moody’s upgraded Uruguay’s bond rating from Baa3 to Baa2, citing Uruguay’s “consolidation of [the country’s] sovereign credit profile,” its “orderly transition towards lower, albeit more stable, growth levels,” and the “decline in Uruguay’s exposure to regional shocks and an increase in its commodity diversification.” Uruguay was able to pull itself out of a massive economic recession through state investment in industry and the implementation of a steady economic growth model.
Despite these economic advances, some questions still remain about the current status of Uruguay’s economy. Last year, Uruguay’s GDP grew by four percent, marking the twelfth year that the country did not fall back into a recession. However, the IMF has warned Uruguay that its inflation rate of eight percent could potentially lead to issues in the future. Uruguay’s unemployment rate, while low compared to many of its Latin American neighbors, currently stands at six and a half percent, and for the past four years, the value of the Uruguayan peso has been steadily decreasing, with current exchange rates standing at 25.54 Uruguayan pesos to one U.S. dollar.
Nonetheless, President Mujica has been praised for Uruguay’s economic advances and hailed as an exemplary leader for democracy and liberalism through social reform. In 2013, The Economist named Uruguay Country of the Year for its ability to rapidly usher in liberal social policies often unheard of in other Latin American congresses. In 2012, the Uruguayan Senate approved a bill to allow women to undergo an abortion during their first trimester of pregnancy, “opening the way for one of the most sweeping abortion rights laws in Latin America.” The Uruguayan Senate clocked another victory with the legalization of cannabis, establishing a highly regulated market valued at U.S. $30 million to $40 million, and possibly creating a new sustainable export; Canada, Chile, and Israel have already shown interest in importing marijuana. Then in 2013, Uruguay legalized gay marriage, indicating that the country is ready to redefine itself socially. Part of the impetus behind these social reform measures lies in President Mujica’s “current brand of low-key radicalism … [which] exemplifies Uruguay’s emergence as arguably Latin America’s most socially liberal country.” Mujica’s relentless agenda of progressive social and economic reform has made him an important, if occasionally divisive, leader. Voters are now faced with the choice of continuing down the path he has set for Uruguay or of shifting in a new direction.
A Fork in the Road
As voters anticipate rushing to the polls on election day, Tabaré Vázquez is projected to carry the largest percentage of the popular vote, although this is far from being a forgone conclusion. Vázquez, 74 years old, is campaigning with Mujica’s Broad Front Party, advocating for a continuation of Mujica’s wave of liberalism. Having previously served as the President of Uruguay from 2005 to 2010, Vázquez oversaw significant economic advances and continuously decreasing unemployment rates. Additionally, he initiated far-reaching education reform, famously giving every teacher and student a computer, and he is often credited with setting up the infrastructure for many of Mujica’s social reforms. However, despite these successes, many people in Uruguay criticize Mujica and Vázquez’s policies as problematic, citing ineffective “handouts” and excessive state inefficiencies. In his second bid for the presidency, Vázquez has promised “orthodox macroeconomic management with government intervention, state-directed resources and direct transfer payments to constituents.” If he is elected, Uruguayans can expect Montevideo to continue the same kind of policies as the last five years.
The son of former President Luis Alberto Lacalle, Luis Lacalle Pou represents the opposite of Vázquez as his rival presidential contender; a graduate from private school and only 41 years old, he makes Vázquez’s elderly state more than apparent. His right-leaning campaign image draws on his relative youth, characterized as a “vibrant” and “fresh” approach to politics. Campaigning on the ticket for the National Party (Partido Nacional), Lacalle Pou has vowed to restrict the widespread availability of marijuana and to immediately address “three emergencies” facing Uruguay: education, security, and infrastructure. Perhaps more importantly, however, are Lacalle Pou’s economic goals. He believes that “Uruguay has fallen hostage to Mercosur,” a sub-regional trading bloc that promotes free trade, “and [has grown] commercially isolated during the last presidential terms” due to the large influence Mercosur countries have exerted over Uruguay’s economy. He has stated that rectifying the country’s economic relations with Argentina, Peru, Colombia, and the Pacific Alliance markets is key to sustaining Uruguay’s economic growth. While Vázquez’s approach is more concerned with building a strong and self-sustaining economy, Lacalle Pou seeks to further open Uruguay’s markets and improve its international trade relations.
This election places at stake the economic aspirations of a growing middle class and which policies will work best at fostering economic growth. On November 30, the country will decide between two different economic systems: either a fresh but as yet unproven conservative route, or the tried, tested, yet contentious liberal road.
Image credit: Flickr / Frente a Aratiri