NO HOPE OF REFORM URUGUAY’S MILITARY RULERS FAIL TO IMPROVE ECONOMY

Press, Volume CXV, Issue 33773, 20 February 1975, Page 14

NO HOPE OF REFORM URUGUAY’S MILITARY RULERS FAIL TO IMPROVE ECONOMY

(By

PATRICK KNIGHT

”, reporting to the “Guardian" from Montevideo.)

(Reprinted by arrangement)

The hope that fundamental reform on the Peruvian mode! might follow when the Uruguayan military took power 18 months ago has non completely evaporated. Unlike their Peruvian colleagues, the Uruguayan military took power with no positive ideas. They have been motivated solely by primitive anti-communism and narrow nationalism.

In Peru, the military leadership comes predominantly ’ from the provinces. It had considerable experience of rural conditions and problems before it took over and undertook fundamental reforms. The Peruvian military’ operate in a country almost without a middle class, with a very strong but small oligarchy, a huge alienated mass of peasants and Indians, and a very low per capita income. Uruguay is very different. It has the third highest per capita income in Latin America, approaching that of some countries of Southern Europe. It has a high level of political awareness and literacy, and is overwhelmingly urban. Both the Peruvian and Brazilian armed forces operate sophisticated high-level training institutes where studies include politics, economics, sociology, and history. No such institute exists in Uruguay. These subjects are Only taught at an elementary level, if at all. Last year was disastrous for the Uruguayan economy, and the prospects for 1975 look little better. The trade deficit was 120 millions, an increase of 80 per cent over 1973. The trains now tun on time, and the airline is not interrupted by strikes — the armed forces now run both — but that is about the sum of the positive.

Inflation exceeded 100 per cent last year, while incomes rose by only 40 per cent. Commercial activity is at a very low level, due to decreased purchasing power. Workers’ salaries are now barely adequate for food and rent. Unemployment has rocketed, while emigration continues at a massive rate. It is estimated that between 250,000 and 500,000 have left during the past six years. The population is only 2.5 millions. First steps

The first steps to free the economy from the myriad controls of recent years have been taken by the

Harvard-trained Minister of: Finance, Mr Alejandro Vegh Villegas, once an assistant; to Roberto Campos, the former architect of the Brazi- > lian “miracle." Sale and purchase of foreign exchange has been (freed and as this measure: I has not had the disastrous I results forecast by the I cautious, Mr Vegh Villegas has been free to proceed to I the next stage, the encouragement of foreign capital without restriction. Much of Uruguay's industry was established years' ago to replace foreign goods: not available at the time. It; has always been heavily! protected, caters only for; the tiny local market, and I has never been modernised! or re-equipped. In this feath-i er-bedded atmosphere, noi efforts have been made to I open up foreign markets for (Uruguayan goods, largely] lbecause of their low quality; land the inexperience and re-; luctance of Uruguayans to] (export.

I If liberalisation measures ]are taken, much of this industry will be eliminated by (Cheaper foreign goods, with ja resulting deterioration in | employment. Defenders of liberalisation :argue that this is a price (which has to be paid. Uruguay, they say, should concentrate on the few sectors where it is competitive — leather goods, textiles, and building materials. The country should take advantage of new circumstances which permit it to supply 5 per cent of the Argentine and Brazilian market without restriction. Workers leave But the emigration of skilled workers, technicians, and professionals makes it doubtful whether Uruguay can meet the demand such changes would create. Nor is foreign capital likely to flow to a country with relatively high wages and social benefits, and strong traditions of worker organisation. There is little cause for optimism in agriculture, either. Cattle are beginning to die in the pastures, affected by a prolonged drought. Due to a miscalculation of demand, the cattie stock has been encouraged to rise. It is now at an all-time record of 12 million, compared with 8.5 million in 1970. Land used in the past for producing wheat has been converted back to pasture, and in 1974 Uruguay was forced to import considerable quantities of wheat, as well as vegetable oils and sugar. The closing of the European market has been a tremendous blow for the country, which 12 years ago sent 60 per cent of its beef to Britain. In spite of the sale of 50,000 tons of beef to Brazil last year and the prospect of this market absorbing a proportion of Uruguay’s production for a few years to come, stocks rise while the consumption of beef within the country continues to fall. Rather than lower the] price of meat — clearing the] land for the planting of

;more lucrative and saleable 11 soya, wheat, sorghum, and ; sugar — Uruguay’s farmers •(seem to prefer to see their 'cattle die of starvation. The country's self-imposed ■isolation — the press is i heavily censored and ’iemasculated — has cut Uru--1 guay off from all reality, i(The opportunities given by ■ i current high feedstuff prices ’ I will almost certainly be lost ■ as other countries increase ' their production and fill the gapJ All is silence in today's ’(Uruguay. The four remaining j I newspapers are prohibited Hfrom comment on all politi'ical, economic, and union '(matters. Between them they know sell only 140,000 copies. * I compared with 500,000 ■(shared between 10 Monte--1 video dailies six years ago. Radio and television are '(equally prostrate, music by 'lmany of Uruguay's famous ■lsingers is now banned, and ■ieach station must play a > I song attacking those who I leave their homeland, twice

| each day. I It is dangerous to over- | romanticise Uruguay's situation. and see it as that of a (gallant people who have fought and lost their fight to (maintain a welfare State, against a rapacious upper Iclass. 1 This is part of the [story, but the Batlle Uruiguay, with its massive public sector employing 60 per ]cent of the working population in the bureaucracy and government owned industry and commerce, pensions for all and the chance to retire at 45, was established from above by men of high principle (though, with hindsight, perhaps of limited vision). i The relatively high standard of living and social benefits were not gained as a result of struggle by the middle and working class. Decades of easy living, the cultivation of European middle class values, and little effort by the population to safeguard the institutions they had inherited made the system vulnerable. The brutality and ferocity of torture, meted out in Uruguayan prisons, probably reflect the present isolated position of the military. Torture has become a matter of routine. Death from injuries is frequent. Obsessed with the idea of an international conspiracy, the military constantly question people about the source of funds and the location of duplicators which produce a steady flow of hostile leaflets. Clearly the population no longer has the strength for real opposition. Leaders have either emigrated or are in prison. The general strike call by the Communist-con-trolled union federation in December was a total failure. Other parties of the Left argued that the moment was inopportune, while leaders had in any case been rounded up and detained. Entirely absent both within Uruguay and with the United States Embassy, fondly seen as the focus point in Uruquay, is a coheIrent plan or model for a [society at Uruguay’s stage of development.