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U.S. President George W. Bush arrives to Uruguay's capital, Montevideo, today, as part of his longest Latin American tour since his election in 2000. The significance of the visit, coming only a month and a half after the two countries signed a Trade and Investment Framework Agreement (TIFA), marking the first potential steps towards a Free Trade Agreement (TLC in its Spanish acronym), is not lost on the residents of this city, which composes half of this country's tiny population of 3.4 million.
With annual exports totaling only $4 billion a year, the Uruguayan market is relatively insignificant to the United States. But what Uruguay potentially holds is the keys to the backdoor of South America's regional trade bloc, Mercosur. Composed of Argentina, Brazil, Paraguay, Uruguay and Venezuela, the bloc has three of Latin America's leading economies and was pivotal in blocking the U.S.-planned Free Trade Area of the Americas (FTAA).
"There is no doubt that the U.S. is interested in Mercosur," said Ruben Villaverde, Director of the Cuesta Duarte Institute of the Uruguayan National Worker's Union.
The United States is determined to revive the stalled FTAA. The Bush administration also sees a TLC with Uruguay as a useful wrench to throw in the cogs of Latin American integration championed by Venezuela's President Hugo Chávez. It was, after all, Mercosur members that stood strong against U.S. intransigence at the America's Summit late in 2005, where Uruguay's left-leaning President Tabaré Vásquez announced on behalf of Mercosur that the "Southern Cone" was not interested.
Uruguay and other member states are strong on rhetoric, calling for a "bigger and better" Mercosur, and they maintain the outward appearance of the bloc as a union of progressive governments. But often times the reality seems quite different.
Brazil's Luiz Inácio Lula da Silva, the charismatic leader of the Brazilian Workers’ Party (PT), was reelected late last year, but he had to wade through one corruption scandal after the next and was forced to toss out most of his inner circle in the process. The humble union leader sent shivers through the Brazilian progressive community earlier this year when he declared that he was "too old to be leftist."
With the entrance of Venezuela last July, Chávez gave the trade bloc a shot in the arm. Although Chávez’s calls for regional integration modeled on the European Union were enthusiastically supported by Uruguay, it has yet to see such discourse bear much fruit.
Uruguay increasingly finds itself sandwiched between its much larger neighbors. Uruguay accuses Argentina and Brazil of squeezing it out of key markets for its few niche commodities. Brazil’s recent attempt to address inequalities in the bloc by giving minor preferences to some Uruguayan industries was rebuffed by Argentina.
Meanwhile, Uruguay is mired in an unexpected and protracted struggle with Argentina over the construction of a pulp mill along the Río Uruguay, which both countries share. Argentine activists are afraid the mill will pollute the river, which drives the local tourist economy. Most Uruguayans have generally rallied behind a nationalist platform for their "right to build the plant," which is being constructed by the Finnish multinational, Botnia. Meanwhile, Argentine activists are crippling Uruguay’s tourist industry by blockading the road that links the two countries for more than three months, and the dispute appears to be without end.
In response, Uruguay retaliated last month by placing import duties of up to 18% on certain Argentine goods, even though Mercosur rules prohibit such duties.
Uruguay is undoubtedly finding it hard to compete, lacking a comparative advantage over its larger neighbors. "What do you do?" asked Uruguayan teacher, Gabriel Scagliola. "What does Uruguay have? Cows, water, beaches, but nothing that its neighbors don't."
As a result, many Uruguayans are turning their gaze to the north, even in sectors of Uruguay's traditionally progressive coalition, the Frente Amplio (Broad Front). "No, there is no way around it," said leftist Senator Enrique Rubio last month, when asked if there was a way to insert Uruguay into the global economy without serious consideration of the United States as a partner. Indeed, with $1.8 billion in Uruguayan exports yearly, the United States is currently Uruguay's largest trading partner after Mercosur.
That's okay for many who believe that increased international investment can solve Uruguay's chronic unemployment problem, but it doesn't cut it for most of the progressive base of the leftist coalition that finally took the Uruguayan presidency two years ago.
Unlike Brazil, Colombia, Guatemala and Mexico, which are the other countries Bush is visiting this week, Uruguay stands apart as the only country in this tour where progressives have a strong grip on both the presidency and congress. (Lula's PT may be at the helm in Brazil, but it had to join forces with business interests and conservative parties in order to get there.)
The Frente Amplio coalition, now in power in Uruguay, is the result of a pact between Communist, Socialist, Christian Democrat and Social Democrat parties made in 1971. After a long struggle under the U.S.-backed military dictatorship of the 1970s and 80s, during which many of the coalition’s leaders were imprisoned, tortured or exiled, the Frente Amplio was able to consolidate its forces to win the Montevideo Mayor's office in 1989 and the country's presidency in 2004.
Though many Frente Amplio heads may be actively wooing the Bush administration and its deep pockets, its masses are not. Three large marches have been planned to take place upon Bush's arrival.
Bearing T-shirts reading, "Bush, out of Latin America," the first group of protesters left Montevideo Tuesday morning, on a three-day 200-kilometer march to the Anchorena estate, where President Bush and President Vásquez will be meeting on Saturday. The 50-person march, led by the powerful Federation of Housing Cooperatives (FUCVAM), specifically denounced the TIFA, the U.S. occupation of Iraq, and U.S. sponsorship of Latin American military dictatorships.
Meanwhile, only three months before the July expiration of Bush’s Fast Track trade negotiating authority, the Bush administration has its eyes set on Latin America.
Although some believe Uruguay is only courting the United States to improve its negotiating position in Mercosur, there are others, such as Uruguay's Economy Minister, Danilo Astori, that are clearly in support of the TLC with the United States. Rumors that Uruguay's Foreign Minister, Reinaldo Gargano—who helped to block TLC talks last fall—may be leaving his post in May, doesn't bode well for those against opening Uruguay's doors to the United States.
Nevertheless, if the goal is to get Mercosur’s attention, it appears that the plan may be working. Lula visited Uruguay last week in what appeared to be an emergency preemptive move to counter the Bush visit. It was an important gesture of good will, in which five agreements where signed, giving what the leaders called "concrete solutions" to the asymmetries between Mercosur nations.
With the recent Democratic takeover of the U.S. Congress, significant steps toward a TLC appear unlikely this weekend. And reports indicate President Bush is not traveling with his whole negotiating team.
But Chávez is not taking Bush's visit lying down. The Venezuelan President arrived to Buenos Aires last night and is slated to attend a huge rally on Saturday under the slogan: "For the unity of Latin America, Bush out." When Bush travels to Colombia Saturday night, Chávez will head to visit his Bolivian counterpart, Evo Morales.
Meanwhile, it appears that Bush is attempting to match Chavez' financial clout in Latin America. Bush announced earlier this week he had asked Congress to authorize nearly $1.5 billion in aid for Latin America. Uruguay’s El País reported that the White House had already committed $385 million to buy housing "for thousands of people."
While some countries in Latin America will look kindly upon Bush's offer, there is little doubt that his words will fall upon many deaf ears, especially in Uruguay. As one FUCVAM member, who identified himself only as Claudio, said at Tuesday's march, "It's time for real change... The North American policies have always been the same. We have to say no."
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