URUGUAY

Oriental Republic of Uruguay República Oriental del Uruguay

CAPITAL: Montevideo

FLAG: The flag, approved in 1830, has four azure blue horizontal stripes on a white background; on a white canton is a golden sun, alternately straight and wavy. This "Sun of May" symbolizes Uruguay's independence.

ANTHEM: Himno Nacional, which begins "Orientales, la patria o la tumba" ("Easterners [Uruguayans], our country or death").

MONETARY UNIT: The Uruguayan peso (up), of 100 centésimos replaced the new peso in 1993 at the rate of up1 = 1,000 new pesos. There are coins of 10, 20, and 50 centésimos and 1, 2, 5, and 10 new pesos, and notes of 1, 5, 10, 20, and 50 Uruguayan pesos. up1 = $0.04023 ($1 = up24.86) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard, but some traditional measures also are used.

HOLIDAYS: New Year's Day, 1 January; Epiphany, 6 January; Landing of the 33, 19 April; Labor Day, 1 May; Battle of Las Piedras, 18 May; Birthday of Artigas, 19 June; Constitution Day, 18 July; Independence Day, 25 August; Columbus Day, 12 October; All Souls' Day, 2 November; Blessing of the Waters, 8 December; Christmas Day, 25 December.

TIME: 9 am = noon GMT.

LOCATION, SIZE, AND EXTENT

The second-smallest South American country, Uruguay is situated in the southeastern part of the continent. It has an area of 176,220 sq km (68,039 sq mi), extending 555 km (345 mi) nnw–sse and 504 km (313 mi) ene–wsw. Comparatively, the area occupied by Uruguay is slightly smaller than the state of Washington. Bounded on the n and ne by Brazil, on the se and s by the Atlantic Ocean, and on the w by Argentina, Uruguay has a total land boundary length of 1,564 km (972 mi) and a coastline of 660 km (410 mi). The Uruguay River and the Río de la Plata separate Uruguay from Argentina. The Cuareim and Yaguarón rivers and the Laguna Merín separate it from Brazil.

Uruguay's capital city, Montevideo, is located in the southern part of the country on the Atlantic coast.

TOPOGRAPHY

The general character of the land is undulating hills, with a few forest areas along the banks of the numerous streams. Southern Uruguay consists mostly of rolling plains and is an eastward extension of the Argentine pampas. The Atlantic coastline is fringed with tidal lakes and sand dunes. Low, unbroken stretches of level land line the banks of the two border rivers, the Uruguay and the Plata. The northern section is broken by occasional ridges and low ranges (cuchillas), alternating with broad valleys, and is a southern extension of Brazil. The highest point in the country, Catedral, is 514 m (1,686 ft) above sea level. The most noteworthy feature of the northwest landscape is the Cuchilla de Haedo. The Cuchilla Grande runs northeastward from the southern region to the Brazilian border. The Negro, which rises in Brazil, crosses Uruguayan territory and flows into the Uruguay River, which separates Uruguay from Argentina.

CLIMATE

The climate is temperate; the average temperature in June, the coolest month, is about 15°c (59°f), and the average for January, the warmest month, is 25°c (77°f). The weather is transitional between the weather of the humid Argentine pampas and that of southern Brazil. Rainfall is evenly distributed throughout the year; it averages about 105 cm (41 in), varying from 97 cm (38 in) in Montevideo to nearly 127 cm (50 in) farther north. There are from 120 to 180 sunny days a year. Frost is virtually unknown.

FLORA AND FAUNA

Uruguay is primarily a grass-growing land, with vegetation that is essentially a continuation of the Argentine pampas. Forest areas are relatively small. The most useful hardwoods are algarobo, guayabo, quebracho, and urunday; other hardwoods include arazá, coronilla, espinillo, lapacho, lignum vitae, and nandubay. The acacia, alder, aloe, eucalyptus (imported from Australia), ombú, poplar, and willow are common softwoods. Palms are indigenous to the valleys. Rosemary, myrtle, scarlet-flowered ceibo, and mimosa are common. Most of the valleys are covered with aromatic shrubs while the rolling hills are blanketed with white and scarlet verbena.

Large animals have virtually disappeared from the eastern regions. The carpincho (water hog), fox, deer, nutria, otter, and small armadillo roam the northern foothills. On the pampas are the hornero (ovenbird), quail, partridge, and crow. The avestruz (a small ostrich similar to the Argentine rhea), swan, and royal duck are found at lagoons. Fish include pompano, salmon, and corvina. The principal reptiles are cross vipers and tortoises. Seals are found on Lobos Island, near Punta del Este.

As of 2002, there were at least 81 species of mammals, 115 species of birds, and over 2,200 species of plants throughout the country.

ENVIRONMENT

Air and water pollution are environmental concerns in Uruguay. Air pollution, which is worse in the larger population centers, is caused primarily by Uruguay's own industries and by an energy plant in neighboring Brazil. Water pollution from mining and industrial sources threatens the nation's water supply, especially pollution from the meat packing and tannery industry. Uruguay has 59 cu km of renewable water resources with 91% of annual withdrawals used for farming activity and 3% for industrial purposes. About 98% of the population has access to safe drinking water. Natural hazards to the environment include drought, flooding, and fires.

Erosion of the soil affects the nation's agricultural productivity. The nation's cities produce about 0.5 million tons of solid waste per year. Government agencies with environmental responsibilities include the Division of Environmental Health, within the Ministry of Public Health; the Ministry of Agriculture; and the Interior Ministry.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), 6 types of mammals, 24 species of birds, 3 types of reptiles, 4 species of amphibians, 11 species of fish, 1 species of invertebrate, and 1 species of plant were threatened. Endangered species included the tundra peregrine falcon, two species of turtle (green sea and leatherback), and two species of crocodile (spectacled caiman and broad-nosed caiman). The glaucous macaw has become extinct.

POPULATION

The population of Uruguay in 2005 was estimated by the United Nations (UN) at 3,419,000, which placed it at number 127 in population among the 193 nations of the world. In 2005, approximately 13% of the population was over 65 years of age, with another 24% of the population under 15 years of age. There were 94 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 0.6%, a rate the government viewed as too low, presenting challenges for economic development. The projected population for the year 2025 was 3,831,000. The population density was 19 per sq km (50 per sq mi), about double that of South America as a whole.

The UN estimated that 93% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 0.82%. The capital city, Montevideo, had a population of 1,341,000 in that year.

MIGRATION

The basic sources of immigration to Uruguay were Spain and Italy. English, French, German, Slavic, and Swiss immigrants also settled in various departments (provinces). In the 1930s, restrictions were placed on immigration, and the importation of seasonal farm workers was stopped. There were 103,002 foreign-born people in 1985. Substantial emigration by Uruguayans for political or economic reasons occurred during the mid-1970s and early 1980s. Official figures suggest that about 180,000 Uruguayans left between 1963–75 and an estimated 500,000 between 1975–95. Argentina and Brazil were the main destinations. Nearly 93% live in urban centers, with 42% concentrated around the capital city.

As of 2000, Uruguay had 89,000 migrants, including less than 100 refugees. In 2004, there were 97 refugees and 10 asylum seekers. The net migration rate in 2005 was an estimated -0.28 migrants per 1,000 population. The government views the immigration level as too low and the emigration level as too high. In 2003 worker remittances were $35.3 million.

ETHNIC GROUPS

About 88% of the inhabitants of Uruguay are white and of European origin, mostly Spanish and Italian; a small percentage is descended from Portuguese, English, and other Europeans. Mestizos (those of mixed white and Amerindian lineage) represent 8% of the population and mulattoes and blacks about 4%. The indigenous Charrúa Amerindians were virtually wiped out early in the colonial era.

LANGUAGES

Spanish is the official language. Uruguayan Spanish, like Argentine Spanish, has been somewhat modified by the Italians who migrated in large numbers to both countries. In general, the language of Uruguay is softer than that of Castile and some words are different from those commonly used in Spain. The gauchos have influenced the language, particularly in words dealing with their way of life. Brazilero (Portunol), a Portuguese-Spanish mix, is spoken on the Brazilian frontier.

RELIGIONS

About 58% of Uruguayans identify themselves as Roman Catholic. Approximately 9% of the population are Protestant or other Christian. The primary mainline Protestant denominations include Anglicans, Methodists, Lutherans, and Baptists. Others include Pentecostals, Mennonites, Eastern Orthodox, Mormons, and Jehovah's Witnesses. The Unification Church has a somewhat strong presence within the country. There are small communities of Muslims and Baha'is. About 30,000 Jews reside in the country.

TRANSPORTATION

After World War II, the Uruguayan government purchased the British-owned railroads and nationalized the entire system. The railroads are run by the State Railway Administration. Four main lines connect the western and northern areas with Montevideo. In 2004, there were 2,073 km (1,287 mi) of track, all of it standard gauge and government-owned.

Highways have surpassed railroads as the principal means of conveyance of passengers and freight. In 2002, there were an estimated 8,764 km (5,446 mi) of roads, of which 7,800 km (4,847 mi) were paved. The Investment and Economic Development Commission's 10-year plan (1965-74) provided about $87 million for highway construction and improvement. A five-year plan for transport and public works, covering the years 1983-87 and partly financed by the IBRD and IDB, provided for construction of 10,000 km (6,200 mi) of new roads. In 1986, the IDB approved a loan of $36 million to help finance a highway development project. Two sections of highway (Routes 1 and 5) in addition to a main artery funneling traffic into Montevideo were scheduled for improvement. In 2003, there were 669,700 motor vehicles, of which 547,800 were passenger cars and 121,900 commercial vehicles.

Montevideo is the major Uruguayan port. Colonia and Nueva Palmira are free ports. There are some 1,600 km (994 mi) of inland waterways, of which the most important are the Plata and the Uruguay, the latter having a depth of 4.3 m (14 ft) as far as Paysandú. Uruguay's merchant fleet in 2005, consisted of 11 vessels of 1,000 GRT or more, totaling 10,918 GRT.

There were an estimated 64 airports in 2004, of which 9 had paved runways as of 2005. Carrasco, an airport 19 km (12 mi) from the center of Montevideo, is used by most international carriers between Europe, Brazil, and Argentina. Frequent air service links Buenos Aires with Montevideo. The state-owned Primeras Líneas Uruguayas de Navegación Aérea (PLUNA) offers service to the principal departmental capitals as well as international flights. In 2003, about 464,000 passengers were carried on scheduled domestic and international airline flights.

HISTORY

During the 16th century, only a few Spanish expeditions landed on the Banda Oriental, or east bank of the Uruguay River. Most of them were driven off by the native Charrúa Amerindians. Jesuit and Franciscan missionaries landed in 1624, and formed permanent settlements. By 1680, Portuguese from Brazil had founded Colonia do Sacramento as a rival to Buenos Aires, on the opposite bank of the estuary. Thereafter, the area was a focal point for Spanish-Portuguese rivalry.

Montevideo was founded in 1726, and Uruguay became part of the viceroyalty of La Plata, which the Spaniards established in Buenos Aires in 1776. During the Napoleonic Wars, the British invaded the region of La Plata and captured Buenos Aires and Montevideo (1806–07), but they were forced out in 1807. After Buenos Aires refused to give Uruguay autonomy, the Uruguayan national hero, José Gervasio Artigas, declared Uruguay independent in 1815. A year later, Brazilians attacked Montevideo from the north, but Artigas led a revolutionary movement against them. The struggle continued from 1816 to 1820, when the Portuguese captured Montevideo and Artigas had to flee to Paraguay. Uruguay was annexed to Brazil in 1821 and was known as the Cisplatine Province.

On 25 August 1825, Juan Antonio Lavalleja, at the head of a group of patriots called the "treinta y tres orientales" ("33 Easterners"), issued a declaration of independence. After a three-year fight, a peace treaty signed on 28 August 1828 guaranteed Uruguay's independence. Disappointed in his hopes for the presidency, Lavalleja launched a series of rebellions. During this period of political turmoil and civil war, the two political parties around which Uruguayan history has traditionally revolved, the Colorados (reds) and the Blancos (whites), were founded. Uruguay's first president, Gen. José Fructuoso Rivera, an ally of Artigas, founded the Colorados. The second president, Brig. Gen. Manuel Oribe, a friend of Lavalleja, founded the Blancos.

The 19th century was largely a struggle between the two factions. Some measure of national unity was achieved in the 1860s. In 1865, Uruguay allied with Brazil and Argentina to defeat Paraguay in the Paraguayan War (1865–70), also known as the War of the Triple Alliance and the Triguarantine War. However, it was not until the election of José Batlle y Ordóñez as president in 1903 that Uruguay matured as a nation.

The Batlle administrations (1903–07, 1911–15) marked the period of greatest progress. A distinguished statesman, Batlle initiated the social welfare system codified in the Uruguayan constitution. From then on, Uruguay's social programs, funded primarily by earnings of beef and wool in foreign markets, gave Uruguay the sobriquet "Switzerland of South America."

After World War II, the Colorados ruled, except for an eight-year period from 1958–66. It was during the administration of President Jorge Pacheco Areco (1967–72) that Uruguay entered a political and social crisis. As wool declined in world markets, export earnings no longer kept pace with the need for greater social expenditures. Political instability resulted, most dramatically in the emergence of Uruguay's National Liberation Movement, popularly known as the Tupamaros. This well-organized urban guerrilla movement mounted a campaign of kidnapping, assassination, and bank robbery while espousing Marxist and nationalist ideals.

In November 1971, Colorado candidate Juan María Bordaberry Arocena was elected president, and the Colorados retained control of the Senate and Chamber of Deputies. After Bordaberry assumed office in March 1972, the Tupamaros ended a temporary truce and returned to the offensive. Their activities, coupled with the worsening economic situation, exacerbated Uruguay's political uncertainty. Gradually, the military assumed a greater role in government, and by 1973 was in control of the system. By the end of 1973, the Tupamaros had been crushed.

Military officers were named in 1974 to head all state-run enterprises, including the Central Bank. The 1966 constitution was suspended and political activity was banned. Military leaders ousted Bordaberry from the presidency in 1976, because of his refusal to restore constitutional rule, and they named a new president, Aparicio Méndez Manfredini. The OAS and other international organizations denounced Uruguay for human rights violations. In 1979, Amnesty International estimated the number of political prisoners at 6,000. In mid-1981, the military government began to negotiate with leaders of the traditional parties, and in September 1981, a "transitional" president, Georgio Álvarez Armellino, was installed.

Intraparty elections took place in November 1982, followed by legislative and presidential voting in November 1984. The moderate government of Colorado candidate Julio María Sanguinetti Cairolo took office in March 1985. Lacking a majority in Congress, Sanguinetti worked closely with other political leaders to reach a consensus on major issues.

One of the first acts of the new government was to release all political prisoners. Another was to declare amnesty for former military and police leaders accused of human rights violations. In an attempt to reconcile warring factions, the government initiated a "social dialogue" with employers and union leaders to reduce social tension. However, slow progress on the economic front led to the 1989 election of the Blanco candidate, Luis Alberto Lacalle.

Lacalle engaged in an ambitious attempt to liberalize the Uruguayan economy. He emphasized deficit reduction, reforms in education, labor, and the civil service, as well as the privatization of state enterprises. However, these plans were dealt a serious blow in 1993, when a plebiscite failed to ratify a set of proposals for liberalization. In November 1994, Sanguinetti was returned to office in the closest elections ever recorded in Uruguay's history. The three-way race between the Colorado, Blanco, and Broad Front (a leftist coalition) parties ended in just a slight majority for Sanguinetti and the Colorados. Both the Blanco and Broad Front candidates were only a few votes behind. It was the first time the Broad Front party had come within reach of the presidency. The Broad Front also gained the municipal government of Montevideo, Uruguay's capital, in 1989 and again in 1994. In the 1990s, the left had discarded revolutionary rhetoric and become more moderate and more appealing to centrist voters. At the same time, many Uruguayans had grown more critical of the traditional parties.

Sanguinetti himself immediately embarked on a program of economic reforms, including a long-range plan for cutting back on Uruguay's historically generous social programs and benefits, including 20 days of vacation after a year of work, paid maternity leave, and a generous retirement package. As a member of Mercosur (Mercado Común del Sur—Southern Cone Common Market), Uruguay faced growing pressure to liberalize its economy during the 1990s, as economic giants, and Mercosur partners Brazil and Argentina had done. Yet voters had twice rejected privatization of state-owned companies, some of which were profitable and often even competitive. The economy also had done well, with the GDP averaging 4.2% growth between 1992–98.

By 1999, the country's economic picture had changed. The troubled Argentinean and Brazilian economies affected Uruguay, where the economy contracted by 2%. Instead of panicking and clamoring for a cut in social benefits and privatization of state industries, presidential candidates from the right and left called for a cautious approach to economic reforms as they neared the October 1999 elections. Tabaré Ramón Vázquez, the former socialist mayor of Montevideo and candidate representing the Broad Front, finished first in the presidential election, with 39% of the vote. He had appealed for caution, gaining the largest number of votes for a leftist coalition in the country's history. But Vázquez failed to gain a 51% majority, forcing a presidential runoff. The Colorado candidate, Jorge Batlle Ibáñez, had unsuccessfully run for the presidency four times and finished second with 31% in the October election. The Blanco candidate, Luis Lacalle, had finished third with 21.5%.

The 72-year-old Batlle, whose great-uncle had built the country's social programs, was not about to dismantle them. He positioned his party as a moderate alternative to Vázquez's leftist coalition. But ultimately, he persevered at the polls by aligning the Colorados with their historic foes: the Blancos. The Blancos aligned themselves with Batlle in exchange for political concessions and ministerial posts. In the November runoff election, Batlle gained 54.1% of the vote to Vázquez's 45.9%. Batlle was inaugurated in March 2000 and named five Blancos to his cabinet. The Blancos and the Colorados also held a slim majority in the Senate, with 17 of 31 seats, and a majority in the lower house, with 54 of 99 seats.

Faced with a shrinking economy and having inherited a country in an economic recession, Batlle faced the economic and political crisis in Argentina, Uruguay's closest and most important ally. The economy remained in a recession in 2000 and 2001, but things got even worse in 2002, when the economy shrunk by 11%. During Batlle's term, the economy shrunk altogether by almost 20%. Though unemployment remained high in recent years, less than 10% of the population lived in poverty by the end of Batlle's term. Yet, Batlle was unsuccessful in adopting a strategy that could generate sustained economic growth and restore dynamism to his country's economy.

In the 2004 elections, the Broad Front capitalized on the discontent with the established traditional Colorado and Blanco parties. Tabaré Vázquez won the presidential election in the first round, with 50.4%. Blanco Party candidate Jorge Larrañaga obtained 34.3% and Guillermo Stirling from the ruling Colorado party won 10.4%. The Broad Front also did extremely well in the parliamentary elections, winning an outright majority of votes and securing control of the Senate (17 of 31 seats) and of the Chamber of Deputies (52 of 99 seats). For the first time in several decades, Uruguay was to be ruled by a party other than the Colorado or Blanco. Vázquez's Broad Front could safely adopt all necessary reforms and implement much needed policies to bring about economic growth and make up for the years of recession and stagnation. The next elections were to be held in October 2009.

Although the economy was a healthy 12.3% in 2004, when Vázquez took office in March of 2005, Uruguay was poorer than in 1998. With a solid 6% growth in his first year, driven by a recovery in Argentina and Brazil, Vázquez was able to increase social spending and help boost employment. Yet, Uruguay's long-term structural deficiencies remained and opportunities for the private sector remained scant. In spite of being a committed leftist, President Vázquez adopted a pragmatic approach to government. He sought to attract foreign investors and made significant efforts to liberalize the economy. Tensions with Argentina, over the construction of a cellulose plant on a river both countries share, underlined President Vázquez's intention to make his country more competitive. Because Uruguay enjoys one of the most stable democracies in the region and boosts one of the lowest levels of inequality and the best-educated workforce in Latin America, the potential for economic growth associated with economic liberalization seemed promising. Yet, the government will need to work hard to liberalize the economy and protect its wide and comprehensive social spending safety net that has helped make Uruguay one of the countries with the lowest levels of poverty in the region. Although he was inaugurated in early 2005, Vázquez showed strong leadership and an ability to bring together Uruguayans in a way that made observers optimistic about the future of the country.

GOVERNMENT

The constitution of 1830 underwent numerous revisions, notably in 1917, 1934, 1952, and 1966. This constitution provided for a republican government, divided into three branches: executive, legislative, and judicial. From 1951 to 1966, the executive consisted of a colegiado, or council, of nine ministers, six from the majority party and three from the minority. In the 1966 elections, however, the electorate reinstated the positions of president and a vice president, popularly elected for a five-year term, together with a council of ministers.

According to the constitutional revision of 1966, the congress (or General Assembly) consisted of the Senate and the Chamber of Deputies. The Senate had 30 popularly elected senators, plus the vice president of the republic as the thirty-first voting member. The Chamber of Deputies had 99 deputies, popularly elected by departments (provinces). The right to vote was extended to all citizens 18 years of age or older, with female suffrage in local elections as early as 1919 and in national elections in 1934.

From June 1973, when President Bordaberry dissolved the Assembly and suspended the constitution, until March 1985, Uruguay was ruled by executive decree, subject to veto by the military, with legislative functions carried out by the 25-member Council of State, appointed by the executive. A new constitution, providing for the permanent participation of the armed forces in government by means of a National Security Council, was drafted by the Council of State but rejected by 57.2% of the voters in a referendum on 30 November 1980.

In March 1985, democracy was restored under President Sanguinetti; in July, the government set up a National Constituent Assembly to devise constitutional reforms that would be submitted to the electorate for ratification. In the elections of November 1994, the proposed reform of 14 articles of the constitution was again rejected, this time by 63% of Uruguayan voters.

Direct democracy provisions, in the form of referendums and legislative proposals initiated by citizens, are widely practiced in Uruguay. Although electoral participation has fallen in recent years, Uruguay remained as one of the most democratically participatory countries in the western hemisphere.

POLITICAL PARTIES

Uruguay has Latin America's oldest two-party system. The Colorados (reds) and Blancos (whites), formed during the conflicts of the 1830s and 1840s, persisted into the 1990s. The Colorados are traditional Latin American liberals, representing urban business interests, and favoring limitation on the power of the Catholic Church. The Blancos (officially called the National Party) are conservatives, defenders of large landowners and the Church.

For more than 90 years, until the 1958 elections, the executive power was controlled by the Colorados. Under such leaders as Batlle, the party promulgated a progressive program advocating public education, advanced labor laws, government ownership of public utilities, and separation of church and state. After eight years of Blanco government, the Colorado party regained power in the 1966 election.

The results of the November 1971 balloting were so close that the final tabulation took more than two months to ascertain; the Colorados won 36.3% of the vote; the Blancos, 35.7%; and the Broad Front (Frente Amplio, a left-wing coalition that included the Tupamaros), 16.6%. These three groups, plus the Christian Democratic Party (Partido Democrático Cristiano—PDC), formed in 1962 from the former Catholic Civic Union, made up the Uruguayan party system at the time of the military takeover.

Political activities were suspended following the constitutional crisis of June 1973, and in December 1973 the Communist and Socialist parties were outlawed. In June 1980, the military began to liberalize, as they permitted political meetings of nonleftist groups. In November 1982, they allowed for intraparty elections in each of three parties: the Colorados, the National Party (Blancos), and the small Civic Union (an outgrowth of the Christian Democrats). In the voting, party candidates who had campaigned against the military's proposed constitution in 1980 took more than 60% of the vote.

Neither Blanco leader Wilson Ferreira Aldunate nor Broad Front leader Líber Seregni Mosquera was allowed to participate in the elections, but both retained their party posts. In the November 1984 elections, Colorado candidate Julio María Sanguinetti Cairolo won the presidency with 38.6% of the vote. The Colorados also won pluralities in the Chamber of Deputies and the Senate. Aldunate and Seregni frequently consulted with President Sanguinetti, and previously outlawed parties were legalized. In 1985, the PDC and FIDEL belonged to the Broad Front, and the National Liberation Movement (Movimiento de Liberación Nacional—MLN), also known as the Tupamaros, reconstituted years after their destruction in 1973, announced their intention to give up violence and join the Broad Front as a legal party.

In 1989, Blanco candidate Lacalle took 37% of the vote. Jorge Batlle, of the Colorado party, unable to capitalize on name recognition, received 29%, while Líber Seregni Mosquera of the Broad Front received 20%. The Blancos also carried a plurality in each house of the legislature, followed respectively by the Colorados, the Broad Front, and the "New Space (or Sector)" Coalition, which consists of the PDC and the Civic Union.

As more people grow disenchanted with market reforms in Latin America, leftist coalitions have become more palatable to voters. In Uruguay, the Broad Coalition candidate Tabaré Vázquez made an impressive show at the polls, finishing first with 39% of the vote in the October 1999 presidential election. His success forced historic foes Blancos and Colorados to back Jorge Batlle in the November runoff election. While Batlle persevered, the leftist coalition managed to increase its total vote behind Vázquez (45.9%). The Batlle presidency was characterized by a further weakening of the traditional parties. Faced by the opposition of the Broad Front, Batlle was forced to rely on the 22 deputies and 7 senators from the National Party that, together with the 33 deputies and 10 senators from the Colorado party, comprised a majority in the 99-seat Chamber of Deputies and 31-seat Senate.

After the 2004 presidential and legislative election, the strength of the Colorado and National (Blanco) party was further diminished. The leftist Broad Front commands a majority control of both chambers. Although the Colorado and National parties have remained formally separated, they have constituted a center-right allied opposition against the Vázquez Broad Front government. The Broad Front, as of 2005, was the largest and most powerful party in Uruguay.

LOCAL GOVERNMENT

Uruguay territorially is divided into 19 departments (provinces). Under the 1966 constitutional revision, each department had a unicameral legislature, but all 19 legislatures were dissolved by President Bordaberry on 28 June 1973. Following the installation of the democratic government in 1985, the departments returned to their pre-1973 status of limited autonomy under the central government.

JUDICIAL SYSTEM

Most of the nation's legal system was suspended in 1973, but in 1981, the military government restored the independence of the civilian judiciary. In that year, a Supreme Judicial Council was empowered to name Supreme Court justices and supervise the judiciary. Below the Supreme Court are appellate courts and lower civil and criminal courts, justices of the peace, electoral and administrative courts, and an accounts court. A parallel military court system operates under its own procedure. When the Supreme Court hears cases involving the military, two military justices join the court. Civilians are tried in the military court only in time of war or insurrection. The judiciary is structurally independent of the executive and this separation of powers is respected in practice.

The constitution prohibits the arbitrary interference with privacy, family, home, or correspondence, and the government authorities respect these provisions in practice.

The legal system is based on Spanish civil law. Uruguay accepts the compulsory jurisdiction of the international court of justice.

ARMED FORCES

The armed forces of Uruguay had 24,000 active personnel in 2005. The Army numbered 15,200, organized into four regional divisions. Equipment included 15 main battle tanks and 68 light tanks. The Navy (including the naval aviation arm and a naval infantry force) numbered 5,700 members. Major naval units included three frigates and nine patrol/coastal vessels. The Air Force had 3,100 personnel and 31 combat capable aircraft, including 18 fighter ground attack aircraft. There was a 920-member paramilitary guard in two units. The defense budget in 2005 totaled $163 million. Uruguay participated in UN peacekeeping and had troops and observers stationed in 12 countries or regions.

INTERNATIONAL COOPERATION

Uruguay is a charter member of the United Nations, having joined 18 December 1945, and belongs to ECLAC and several nonregional specialized agencies, such as the FAO, the World Bank, ILO, UNCTAD, UNESCO, UNIDO, IAEA, and the WHO. Uruguay is also a member of the South American Community of Nations (CSN), the Inter-American Development Bank, G-77, the Latin American Economic System (LAES), the Latin American Integration Association (LAIA), the WTO, the OAS, and the Río Group. In 1995, Uruguay became a founding member (with Brazil, Argentina, and Paraguay) of the Southern Cone Common Market, known as Mercosur (Mercado Comun del Sur).

Uruguay is a guest in the Nonaligned Movement and a member of the Agency for the Prohibition of Nuclear Weapons in Latin America and the Caribbean (OPANAL). The country has supported UN missions and operations in India and Pakistan (est. 1949), Western Sahara (est. 1991), Ethiopia and Eritrea (est. 2000), Sierra Leone (est. 1999, Burundi (est. 2004), Cyprus (est. 1964), and Georgia (est. 1993), among others. The country is a signatory of the 1947 Río Treaty, an inter-American security agreement.

In environmental cooperation, Uruguay is part of the Antarctic Treaty, the Basel Convention, the Convention on Biological Diversity, Ramsar, CITES, the Kyoto Protocol, the Montréal Protocol, MARPOL, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

Uruguay's economy remains dependent on agriculture. Agricultural production, combined with the industrial sector based on the transformation of agricultural products, makes up more than half of the country's exports. However, the service sector, especially tourism and financial services, was growing quickly in the early 2000s. In 2005 the service sector was estimated to be over 65% of GDP and employed about 70% of the labor force. Agriculture, however, was still important, particularly livestock production for export and consumption, as well as for inputs for other sectors of the economy. Agriculture accounts for 7% of GDP but employs 14% of the labor force. Industry (agro-industry, chemicals, and consumer goods for local consumption) declined in recent years as the service sector expanded, particularly in terms of employment. Industry employs 16% of the work force, but accounts for 28% of GDP. There is a mixture of private and state enterprises with the economy generally open to foreign trade and investment.

Due partly to the demand generated by World War II and the Korean War for industrial products and also to government efforts to attain a fair degree of economic self-sufficiency and to improve foreign trade, the value of Uruguay's industrial output doubled between 1936 and 1960. Between 1960 and 1970, the industrial growth rate leveled off as the limitations of an import-substitution strategy became apparent. Encouragement of nontraditional manufactured exports led to industrial production increases averaging 6% annually during 1973–79. The lack of natural resources obliged Uruguay to import most raw materials needed by its industries.

In the early 1980s, in the wake of the second oil shock, the economic situation was characterized by an uninterrupted fall in real output, low levels of investment, high unemployment, mounting inflation, a severe imbalance in public finance, and a massive accumulation of arrears in private-sector debt to the domestic banking system, which in turn caused a potentially critical situation in the country's financial institutions. In mid-1985, the government negotiated agreements with the IMF and creditor banks that produced a standby credit from the Fund, a renegotiation of debt with foreign banks, and an economic-financial program with the IMF intended to reduce the public-sector deficit, inflation and the money supply, and to remedy the balance-of-payments disequilibrium.

Since 1990, the government has pursued a program of economic liberalization, which has included lowering of tariffs, Southern Common Market (Mercosur) integration, reducing deficit spending, controlling inflation, and downsizing government. Growth in GDP averaged 3.7% between 1988 and 1998, with an average 4.75% between 1997 and 1998. However, from 1999 to 2003 the economy experienced an uninterrupted series of contractions. Real GDP contracted 3.2% mainly due to the Brazilian currency devaluation of January 1999, which hurt both Uruguay's exports and its tourist receipts. The government entered into a precautionary standby arrangement with the IMF, but in 2000, the recession eased to 1% of GDP as the government pursued neo-liberal reforms supported by one-year standby agreements with the IMF.

In 2001, a local outbreak of hoof-and-mouth disease that hurt meat exports and the Argentine financial crisis combined with the global economic slowdown and the after-effects of the terrorist attacks on 11 September 2001 to produce a contraction of 2.5%. In 2002, the real decline in GDP reached 10.8%. Attempts were made to prevent the spread of the Argentinean meltdown to Uruguay through extended and enhanced standby agreements. These set a target of 1.7% contraction for 2002, one-tenth of what actually took place. In August 2002, the US government announced it was providing $1.5 billion in short-term loans to Uruguay. That year unemployment reached a high of 19.4%, up from 10.3% in 1997; by 2005, unemployment was up slightly, to 12%.

Contributing to the improved economy were increased exports to North America, especially of meat. Foreign investment has also been encouraged, and new economic sectors have developed, notably a software industry. Furthermore, a successful debt swap helped restore confidence and significantly reduced risk. Uruguay's economy resumed growth in 2003, with a 2.5% rise in GDP. GDP grew about 12% in 2004 and 6.2% in 2005.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Uruguay's gross domestic product (GDP) was estimated at $32.9 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $10,000. The annual growth rate of GDP was estimated at 6.2%. The average inflation rate in 2005 was 4.9%. It was estimated that agriculture accounted for 7.1% of GDP, industry 27.7%, and services 65.2%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $32 million or about $9 per capita and accounted for approximately 0.3% of GDP. Foreign aid receipts amounted to $17 million or about $5 per capita and accounted for approximately 0.2% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Uruguay totaled $8.15 billion or about $2,411 per capita based on a GDP of $11.2 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 2.4%. In 2001 it was estimated that approximately 22% of household consumption was spent on food, 14% on fuel, 11% on health care, and 30% on education. It was estimated that in 2003 about 21% of the population had incomes below the poverty line.

LABOR

Uruguay's labor force in 2005 was estimated at 1.52 million. In 2003, the services sector accounted for 73.9% of the workforce, with industry at 21.5%, agriculture at 4.5%, with the remainder in undefined occupations. The unemployment rate in 2005 was estimated at 12%.

In 1943, industrial wage boards with seven members (three for the government, two for the employers, and two for the employees) were established to fix minimum wages and settle wage disputes. Because the wage boards (consejos de salarios) were slow in reaching decisions, the Uruguayan labor force tended to use the strike as a first resort to force the initiation of negotiations. Since 1968, wages and prices have been controlled by the Price and Wage Commission. In July 1973, the National Workers' Convention, which claimed 400,000 members, was declared illegal. Laws enacted in August 1974 restricted trade-union membership to "free and nonpolitical" trade unions. Political activity by union officials was banned, as were strikes in the public sector, health, and commerce. Labor conditions returned to pre-1973 conditions with the 1985 government changeover. The sudden release of years of frustration triggered some 250 strikes in the ensuing year. Uruguay's sole labor confederation is the Inter-Union Workers Assembly-National Federation of Workers (PIT-CNT). In 2002, over 80% of the public sector workforce was unionized, with the number of union members in private industry at around 5%.

The eight-hour day and 48-hour week were instituted in 1915 and remained the standard in 2002. The law provides for one day of rest after every six days of work and grants holidays with pay, plus an annual vacation bonus. The minimum wage was $80 per month in 2002, but it functions in practice as an index for calculating wage rates rather than a measure of a minimum subsistence wage. Most workers earn more than this minimum. The minimum working age is 15, and it is generally enforced although the number of children working in the informal economy is increasing.

AGRICULTURE

Uruguay has a primarily agricultural and pastoral economy, but the importance of these sectors has been declining. The formation of the Mercosur common market in 1995 had a significant effect on Uruguayan agriculture by providing preferential access to neighboring countries, particularly Brazil. Agriculture and animal husbandry together contributed 13% of the GDP in 2003. About 40% of the agriculture's contribution to GDP comes from crops and the rest is from animal husbandry. About 77% of Uruguay's land area is devoted to stock raising and 7.4% to the cultivation of crops. In pasturage, large farms predominate, with farms of more than 1,000 hectares (2,500 acres) accounting for two-thirds of all farmland. Crops are grown mainly on small farms of less than 100 hectares (250 acres).

The principal crops harvested (in thousands of tons) in 2004 were rice, 1,262; wheat, 532; barley, 406; corn, 223; sorghum, 70; soybeans, 377; sunflower seeds, 177; oats, 26; apples, 72; and peaches, 14.

ANIMAL HUSBANDRY

Livestock is the basis of the economy. The production costs of stock raising are low, and the quality of the product is generally high. Hereford, Shorthorn, and Aberdeen Angus breeds account for 90% of all beef cattle, with Hereford the most numerous. Corriedale represents about 70% of the sheep stock, followed by Ideal (11%).

Uruguay is especially suited to the raising of sheep and cattle. In 2005, Uruguay had 9,712,000 sheep, second in South America after Brazil. There were also 11,700,000 head of cattle, 380,000 horses, 240,000 pigs, 16,000 goats, and 13,300,300 chickens in 2005. Milk production has expanded, reaching 1.5 million tons in 2005. The preferential duties provided under Mercosur have given Uruguay a great advantage in selling its dairy products to Brazil. The main products exported are cheese, whole and nonfat dry milk, and butter. Meat production in 2005 included 496,000 tons of beef and 26,500 tons of mutton. Beef consumption in Uruguay was about 60 kg per person in 1998, one of highest rates in the world. Leading exports of animals and animal products by value (in millions of dollars) in 2004 were: meat products, $670.9 million; dairy and eggs, $174.9 million; and wool, $17.5 million.

The Ministry of Agriculture and Fisheries is responsible for stock raising and breeding, control of animal diseases, and improvement of existing grassland and arable resources. The National Meat Board acts as consultant to the government. The meat-packing industry, taken over by the government in 1958, has been restored to the private sector. The government encourages local production through a system of special licenses or customs documents for imported meat and livestock. Furthermore, imports of bull semen and embryos are numerically restricted and must comply with animal health requirements.

FISHING

Fishing underwent rapid growth in the 1970s. The government-promoted fishing industry made an average annual catch of about 6,000 tons in the 1960s; the catch increased to 20,600 tons in 1972 and, despite temporary setbacks, to 143,170 tons by 1991. In 2003, the total catch was 116,935 tons. Fish exports in 2003 amounted to $108 million.

There are three fishing zones on the southern coast: the low zone, from Colonia to Piriápolis; the middle zone, from Piriápolis to Punta del Este, which is considered one of the finest fishing areas in the world; and the high zone, from Punta del Este to the Brazilian border. Principal commercial species include Argentine hake, whitemouth croaker, and striped weakfish. Other important sea fish are corvina negra (a kind of bass), mullet, sole, anchovy, mackerel, whiting, and shark. The finest freshwater fish is the dorado, a type of salmon.

FORESTRY

Uruguay has some 1,292,000 hectares (3,193,000 acres) of forestland. About 50,000 hectares (124,000 acres) were reforested annually from 1990 to 2000. The principal species cultivated are eucalyptus and pine; domestic woods are used primarily for windbreaks, fence posts, and firewood. Lumber suitable for building and construction is imported. Roundwood removals totaled 6,399,000 cu m (225.9 million cu ft) in 2004, with 67% used as fuel wood.

MINING

Uruguay's mining sector has traditionally been based on the economically significant exploitation of nonmetallic minerals for the construction, glass, and ceramics industries. The most important commodities were clays, bentonite, dolomite, feldspar, granite, gravel, gypsum, limestone, pebbles, quartz, sand, and talc. There was also minor production of semiprecious stones and ornamental rocks. Various types of clay were mined for producing brick, pipe, tile, and whiteware. Talc was mined for use in the paper industry and in ceramics, cosmetics, insecticides, and pharmaceuticals. Feldspar was mined for the ceramics industry and glass. Estimated production in tons (except where noted) for 2003 included: common sand, 2.7 million tons; limestone, 1.3 million tons; clays, 24,900 metric tons; gypsum, 1.130 million tons; agate, 420 metric tons; and amethyst, 170 metric tons. Also produced in 2003 were barite, bentonite, hydraulic cement, dolomite, feldspar, flagstone, gold, granite, gravel, iron ore, lime, marble, marl, onyx, quartz, stone (including ballast), sulfur, pryophyllite soap-stone talc, traventine, and tufa tuff. Sand, common stone, and talcum were exported, although no minerals ranked among leading export commodities. Limestone had significant potential for export growth.

All products of the subsoil belonged to the state. There were more than 350 ongoing extraction projects; most were small scale. The past few years have seen a revival of minerals prospecting and exploitation, which had been idle for many years. Changes in national legislation have improved the business environment and opened the country to foreign investment, resulting in mining output growth of almost 4% per year in 1997–2001 and the implementation of gold and cement projects. There were deposits of manganese, iron, lead, and copper, and commercial gold mining was begun in 1997 at the San Gregorio mine, Rivera Department, and at the Santa Teresa deposit in 2001. Agates, opals, and onyx were found in Salto and Artigas. In 2001, diamond exploration was begun, although there was been no recorded diamond output in 2003 or 2002. Drilling began in 2001 on the Paso del Lugo nickel project.

ENERGY AND POWER

Uruguay, with no proven hydrocarbon resources, is heavily dependent upon hydropower and imports of oil, natural gas, and coal to meet its energy requirements.

In 2004, Uruguay's demand for oil averaged an estimated 31,000 barrels per day, all of it imported. The country however, does possess a crude oil refining capacity represented by the single La Teja facility, which as of 1 January 2004 had an estimated capacity of 50,000 barrels per day. As with oil, Uruguay imported all the natural gas it consumed. In 2002, Uruguay's demand for natural gas totaled an estimated 0.7 billion cu ft. Although Argentina has been Uruguay's chief supplier of natural gas, an energy crisis has forced Argentina to limit its exports of natural gas. To make up the shortfall, Uruguay, in September 2004, signed a natural gas supply contract with Bolivia. In 2002, Uruguay's demand for coal was met entirely by imports. In 2002, coal imports totaled an estimated 2,600 short tons.

Uruguay's electric power is provided by hydroelectric and diesel generating plants. In 2002, Uruguay's electric power generating capacity was estimated at 2.1 GW, of which conventional thermal plants accounted for 29% of capacity, and hydroelectric 71%. In that year, electric power output totaled 9.508 billion kWh, of which 9.442 billion kWh came from hydroelectric sources, followed by geothermal/other at 0.034 billion kWh and conventional thermal fueled plants at 0.032 billion kWh. Uruguay has one of Latin America's highest rates of electrification (95% as of 2002).

INDUSTRY

Although foreign trade depends mainly on agriculture, the production of industrial goods for domestic consumption is increasing, primarily in the fields of textiles, tires, shoes, leather apparel, cement, petroleum refining, and wine. World War II spurred the industrial growth of Uruguay, and now local industry supplies most of the manufactured products used. Most industry is concentrated in and around Montevideo.

Manufacturing output declined by an average of 1.3% annually between 1977 and 1987, and declined by an average of 0.10% per year during 1988–98. In 1998, manufacturing improved with 2.3% growth, accounting for 18% of GDP. Growth was led by oil refining, car production, and food production. However, in the first half of 1999 the manufacturing sector suffered a setback, declining by 6.1%. Reduction of domestic demand and a decrease in exports to Brazil and Argentina contributed to the overall decline. A recession that began in 1999 and continued into 2002 further hampered industrial growth. Sectors showing overall production decreases included textiles, vehicles, machinery, chemicals, paper, processed meat, and sugar. By 2004, industry as a whole accounted for 31.7% of GDP, a small increase over 2001 (29%).

The manufacturing sector still has severe structural problems as a legacy of the protectionist policies that stressed import substitution during the 1970s. With the Mercosur trade bloc, the domestic market for manufactured goods has opened to strong competition from Argentina and Brazil. The automotive, electronic, and machinery sectors will probably continue to decline because of competition among Mercosur partners. Uruguay produced 10,530 automobiles in 2001, down 27% from the 14,404 units produced in 2000; however, the government has prioritized the recovery of the automobile industry, considering it to be one of the possible pillars for the country's creation of new jobs.

With no proven hydrocarbon resources, Uruguay is wholly dependent on imports for oil, natural gas, and coal. The country's sole refinery is the 50,000-bbl/d La Teja facility. The state-owned oil company, Administración Nacional de Combustibles Alcohol y Portland (ANCAP), controls Uruguay's entire oil sector. Relying on imported oil and natural gas, as well as on domestic hydropower, has, at times, jeopardized Uruguay's energy supply. Since spring 2004, for instance, Uruguay dealt with a number of energy supply challenges—higher global oil prices, lower water levels in domestic hydropower facilities, and decreased power imports (including both electricity and natural gas) from Argentina. Hydropower remains Uruguay's main energy source, but a drought has left Uruguay's hydropower plants operating well below capacity in 2004–06, forcing the government to resort to running more expensive oil-fired power plants. Meanwhile, reduced imports of electricity and natural gas from Argentina, which has been experiencing its own energy crisis, have prompted the Uruguayan government to sign power supply contracts with Brazil (electricity) and Bolivia (natural gas) to make up for shortfalls.

SCIENCE AND TECHNOLOGY

The UNESCO Regional Office for Science and Technology in Latin America and the Caribbean is located in Montevideo. Learned societies include the Pediatrics Society, the Association of Uruguayan Engineers, the Chemical and Pharmaceutical Association, the Odontological Association, and the Surgical Society, all headquartered in Montevideo. The University of the Republic, founded in 1849 at Montevideo, has faculties of agronomy, sciences, engineering, medicine, dentistry, chemistry, and veterinary medicine. The Institute of Higher Studies, founded in 1928 at Montevideo, offers courses in biological climatology, geomorphology, paleontology, and mathematics. The Higher Institute of Electrical Engineering, Electronics, and Computing was founded in 1922 at Montevideo.

In 1987–97, science and engineering students accounted for 32% of college and university enrollments. In 2002, spending on research and development (R&D) totaled $69.232 million, or 0.26% of GDP, Of that amount, the business sector accounted for the largest portion, 46.7%, followed by higher education at 31.4%. Government R&D spending accounted for 17.1%, with 4.7% coming from foreign sources. In that same year, there were 370 scientists and engineers, and 51 technicians per million people, engaged in R&D. High technology exports in 2002 totaled $19 million, or 3% of all the country's manufactured exports.

DOMESTIC TRADE

Although the Uruguayan population is small, it has a relatively high purchasing power. Wholesale and retail trade accounted for 12.4% of GDP in 1996. The reasonably good transportation system allows easy shipment of agricultural products to the capital. Chambers of commerce and other trade associations play an active role in interpreting local market demands. Overland trade has increased markedly since the Mercosur (Southern Common Market) pact was formed in the 1990s.

The labor market improved in 2004 with the average unemployment rate dropping from 17.1% in 2003 to 13.4%, and real average wages were starting to stabilize.

FOREIGN TRADE

Uruguay traditionally relied on foreign sales of wool, hides, and meat products for its export revenues, which increased steadily until 1998, and then dropped off slightly. Export revenues from goods and services annually increased by an average of 3.3% during 1977–87, and by 8.2% between 1988 and 1998. The value of imports fell by an average 1.7% per year during the 1980s, but has increased by an average of 17.1% annually during 1990–95. In 2000, exports increased by 2.6% and imports rose 3.3%.

Imports have been stimulated by falling tariffs, the ongoing implementation of Mercosur agreements, revaluation of the Uruguayan peso, and gradual liberalization of the economy. Rising imports of consumer goods reflect pent-up demand, while increased imports of capital goods reflect the need to upgrade industrial facilities to meet foreign competition. In the first half of 1999, Uruguay's exports declined by 25%. The nation's trade deficit nearly doubled between 1998 and 1999 as a result of the international financial recession.

Uruguay is a member of the Río Group, an association of Latin American states that deals with multilateral security issues (under the Inter-American Treaty of Reciprocal Assistance). Uruguay's location between Argentina and Brazil makes close relations with these two larger neighbors and Mercosur associate members Chile and Bolivia particularly important. Uruguay is a member of the Latin American Integration Association (ALADI), a trade association based in Montevideo that includes 10 South American countries plus Mexico and Cuba.

In 2004, Uruguay exported $2.9 billion, mainly meat, wool, hides, leather, wool products, fish, rice, and furs. The major export markets are the United States (19.8%), Brazil (16.3%), Argentina

(7.6%), Germany (5.1%), Mexico (4.0%), and China (3.9%). Imports reached $3.1 billion, mainly machinery, chemicals, fuel, and vehicles. The major suppliers are Brazil and Argentina (25.7% each), United States (9.0%), China (7.1%), and Germany (3.4%).

BALANCE OF PAYMENTS

Balance of payments deficits are common in Uruguay, owing to fluctuating world markets for agricultural exports and a high dependency on imports for raw materials and fuels. Traditionally, multilateral assistance, income from tourism, and inflow of capital from other Latin American countries has tended to offset the negative trade picture. The balance of payments in the 1980s and 1990s was affected by the continued weakening of international prices of Uruguay's exports, which are concentrated in a few products—meat, rice, wool, dairy products, and leather account for about half of the country's exports. The Batlle administration in the early 2000s was looking to expand trade with the United States and the rest of NAFTA. The country's trade with Mercosur has declined in recent years, in part due to a decline in Brazil's importance as a source for Uruguayan imports. Trade with Argentina subsequently increased.

The US Central Intelligence Agency (CIA) reported that in 2001 the purchasing power parity of Uruguay's exports was $2.24 billion while imports totaled $2.9 billion resulting in a trade deficit of $660 million. The International Monetary Fund (IMF) reported that in 2001 Uruguay had exports of goods totaling $2.15 billion and imports totaling $2.92 billion. The services credit totaled $1.13 billion and debit $803 million.

Currently, the balance of payments is under control, although the account shows a modest deficit, reflecting the strong pickup in imports that, in part, is being financed by foreign direct investment. Gross international reserves are expected to increase, raising the coverage of dollar liabilities in the banking system by official reserves and bank foreign assets to about 62%. Several measures

have been undertaken to maintain its stability. The fiscal program is well on track, and is attempting to exceed the primary surplus target of 3.4% of GDP in 2004. Expenditure restraint will be maintained, and public tariffs will continue to be adjusted in line with operational costs. No further tax reductions will be granted.

BANKING AND SECURITIES

The Bank of the Republic (Banco de la República Oriental del Uruguay—BRDU), established in 1896, is a state bank with a government-appointed director. It operates as both a public and a private bank. It is the financial agent of the government; it also acts as an autonomous agency and, as a commercial bank, makes loans and receives deposits. It participates in determining financial policies and the allocation of foreign exchange for imports. One of its main functions is to provide rural credit.

The 1966 constitutional revision created a Central Bank (Banco Central del Uruguay—BCU), which is responsible for currency circulation, thus permitting the Bank of the Republic to concentrate on public and private credit. The third state bank is the Mortgage Bank (Banco Hipotecario del Uruguay-BHU). There are 21 private banks operating in Uruguay, the 3 public banks, 8 financial institutions, 12 offshore banks, and 6 savings and loans organizations.

In the early 1980s, economic recession produced a flood of bad debts, prompting the BCU to introduce a refinancing scheme in 1983, under which it took over the nonperforming loans of some financial institutions. This improved the liquidity of the financial system, but shifted the burden onto public finances. In 1999, the IMF criticized Uruguay's two large public banks as being less efficient and profitable than private banks, calling for banking reforms.

A policy of regular minidevaluations was introduced in mid-1975; currency stability was established in the late 1970s, but in November 1982, the peso, regarded as overvalued, was allowed to float freely. The peso has fallen against the dollar since that time. As of 1999, about 90% of the private sector's deposits in the banking system were dollar-denominated, and 75% of the overall credit to the private sector was in dollars. Most purchases were made in dollars. Net foreign reserves equaled $2.43 billion at the end of 1998.

The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.0 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $11.1 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 22.1%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 71.66%.

The Montevideo Stock Exchange is supplemented by its Internet based partner, the Bolsa Electrónica de Valores (BEVSA). The number of firms raising risk capital through the stock exchange is very small, and only 19 companies are quoted on it. In 1999, practically no shares were traded in the stock market.

INSURANCE

The State Insurance Bank (Banco de Seguros del Estado—BSE), launched early in 1912 by a bond issue, was granted a monopoly on all insurance in 1919; however, private insurance companies were allowed to continue issuing life, fire, and marine insurance if they had been in business prior to creation of the state bank. An October 1993 law demonopolized the insurance industry, allowing an individual to purchase insurance with the company of his or her choice, as well as allowing Brazilian, UK, and Spanish companies among others to participate in the market. The Banco de Seguros des Estado remains, however, the only company permitted to insure occupational and health hazard. In 2003, the value of all direct insurance premiums written totaled $238 million, of which nonlife premiums accounted for $185 million. For that same year, the top nonlife and life insurer was Banco de Seguros del Estatdo, which had gross written nonlife and life insurance premiums of $122.9 million and $24.1 million, respectively.

PUBLIC FINANCE

Under the inflationary pressures of the 1990s, budgetary expenditures generally exceeded revenues, although greater fiscal austerity caused a decrease in the budget deficit. In 1998, the number of government offices was reduced by one-third. The 1998 budget deficit was 0.9% of GDP, mostly financed by external loans ($685 million). Because of falling tax revenues and increased spending, the deficit rose in 1999.

The US Central Intelligence Agency (CIA) estimated that in 2005 Uruguay's central government took in revenues of approximately $4.4 billion and had expenditures of $4.8 billion. Revenues minus expenditures totaled approximately -$377 million. Public debt in 2005 amounted to 82.1% of GDP. Total external debt was $9.931 billion.

The International Monetary Fund (IMF) reported that in 2001, the most recent year for which it had data, central government revenues in millions of pesos were 65,592 and expenditures were 77,487. The value of revenues in millions of US dollars was $4,925 and expenditures $5,956, based on a market exchange rate for 2001 of 13.3191 as reported by the IMF. Government outlays by function were as follows: general public services, 14.9%; defense, 4.2%; public order and safety, 4.7%; economic affairs, 5.8%; housing and community amenities, 1.6%; health, 6.6%; recreation, culture, and religion, 0.6%; education, 7.6%; and social protection, 56.5%.

TAXATION

As of 2005, corporate tax is imposed on industrial and commercial income at a flat rate of 30%. Capital gains incurred by companies are taxed as ordinary income at the corporate rate. Individuals are not subject to a capital gains tax. A 30% withholding tax is also imposed on dividends and royalties paid to nonresidents. Other taxes include a commissions tax of 9% and a capital tax of 15%. Personal income and inheritance taxes were repealed in 1974. Other taxes include a net worth tax, a 2.8% tax on banking activities, a bank assets tax, farming and property taxes, consumption taxes, and insurance taxes.

The most important indirect tax is Uruguay's value-added tax (VAT) instituted in January 1968. The standard rate is 23% and there is a reduced rate of 14% on necessities such as foodstuffs, as well as on fruit, flowers, road passenger transport, and hotel accommodation services. Exempt are imports of crude oil, the transfer and rental of immovable property, agricultural goods and raw materials, certain types of machinery, certain banking activities, and medical services.

CUSTOMS AND DUTIES

Uruguay is a member of the Southern Common Market (Mercosur) along with Argentina, Brazil and Paraguay. As of July 2003, the Mercosur common external tariff (CET) ranged from 0–20% on most goods, although there is a 21.5% rate. A general 23% VAT rate is applied, although a lower 10% rate is assessed on certain products, while a 14% rate is applied to medicines, certain basic foodstuffs, and certain primary products. Excise taxes ranged from 10–30% on soft drinks, cosmetics, and motor vehicles, to 70% on tobacco, 80% on alcohol, and 133% for gasoline. Almost all goods can be imported into Uruguay without restrictions or licenses.

Tariff preferences are also given to members of the LAFA. Uruguay also has a large number of bilateral investment agreements, mostly with EU countries.

Free trade zones operate in Colonia, Florida, Nueva Helvecia, Nueva Palmira, Río Negro, Rivera, San José, and Montevideo.

FOREIGN INVESTMENT

Historically, Uruguay maintained a number of state monopolies in which direct foreign equity participation was prohibited. Uruguay's Foreign Investment Law of 28 March 1974 closed certain industries to foreign investors: public water and drainage services, railroads, alcohol and petroleum refineries, electric, telephone, local telegraph, mail, port services, insurance, and issuance of mortgage bonds. Private investment in other sectors was generally welcomed.

From 1992 to 1998, foreign direct investment (FDI) amounted to about $150 million annually, which reflected a relatively low pace of privatization, even though the government promoted investment in the mining, tourism, hydrocarbons, forestry, printing, and media sectors.

The 1998 Investment Promotion and Protection Law declared that promotion and protection of national and foreign investment was in the national interest. Foreign and national investments would be treated the same, and investment would be allowed without prior authorization or registration. Complete foreign ownership is allowed in most sectors except for oil and telecommunications. Privatization is often popularly opposed, and the state seeks to foster efficiency through de-monopolization and deregulation. State sectors that have been partially liberalized include insurance, mortgages, road building and repair, water sanitation and distribution, energy generation, piped gas distribution, and cellular phones.

From 1999 to 2001 FDI inflow increased steadily, from $239 million to $285 million, to $320 million. Under the impact of the worldwide decline in outward FDI, flows to Uruguay in 2002 are estimated to have fallen about one-third, but rebounded in 2003. Main investors included Canada and the EU.

A law in February 2001 de-monopolized the telecommunications industry, which was controlled by ANTEL. The state-owned oil company ANCAP was the only importer and refiner of petroleum products in Uruguay, and was scheduled to remain a monopoly until 2006. There are nine free trade zones (FTZs), in the country, some state-owned and operated, others state-owned but privately operated, and others privately owned and operated. FTZs offer tax and duty exemptions.

FDI was virtually insignificant at the beginning of the 1990s but increased quite steadily afterwards, accounting for 1.36% of GDP in 2000 and 2.46% of GDP in 2003. FDI in Uruguay has been historically low because of the country's small market, the lack of major privatizations, and the small number of firms that base their Mercosur-wide operations locally. Uruguay's FDI/GDP ratio of 1% is well below the Latin American/Caribbean average of about 3%, and that of its Southern Cone neighbors Argentina and Brazil, with 2.6% each, and Chile with 5.6%.

According to Uruguay's Central Bank, FDI stock declined from $2.4 billion in 2001 to $1.4 billion in 2002, mostly due to decreased asset values following the sharp 2002 economic contraction and devaluation. Economic recovery led the stock of FDI to increase to $1.8 billion in 2003.

ECONOMIC DEVELOPMENT

Monopolies have traditionally been permitted in the fields of banking and insurance, postal services, ports, water, light and power, telephone services, and fuels. Industrial and commercial activities of the state must be organized as "autonomous entities." Other public services may be organized as autonomous entities, like decentralized services, or divisions under a ministry. Exceptions to this policy are state-operated postal and telephone services, customs houses, port administration, and public health.

The Committee on Investment and Economic Development, established in 1960, published a 10-year plan for 1965–75 for production, investment, and consumption. The plan, stressing industrial development and external financing, was superseded in April 1973 by the National Development Plan for 1973–77, prepared by the Planning and Budget Office. This plan projected an annual growth rate of 3.8% in real gross domestic product (GDP), or 2.5% per capita; increases in exports and imports were projected at 10.1% and 14.9%, respectively. Domestic investment was to rise at an annual rate of 15.1%—a projection quite remote from the actual average annual increase of 3.2% realized during 1966–72.

After the severe slump of the early 1980s, the decisive actions by the new government injected life into the economy. In particular, restructuring the heavy domestic debt burden of the industrial and agricultural sectors increased confidence in the economy. Domestic investment rose sharply, with some industries at full capacity.

The Lacalle administration continued the fiscal adjustment program in 1990 to reduce the budget deficit. A state-enterprises reforms law passed in September 1991 permitted partial privatization of certain state-owned enterprises. Uruguay also became an important trade partner and provider of services to Mercosur countries. The flip side of this relationship was Uruguay's dependency on and vulnerability to economic developments in its neighboring countries. A slowdown in Brazilian growth and a recession in Argentina caused Uruguay's economy to slip into recession in 1995 and in 1998.

The government instituted a three-stage stabilization program in 1994. The plan increased consumption and payroll taxes, instituted a program designed to downsize government, and planned for long-term social security reform. This plan continued into the late 1990s with moderate success, but a recession hit in 1999 that exacerbated the problems of a state-monopolized economy dependent upon exports to Argentina and Brazil, and dependent on US dollars for the currency.

The financial crisis in Argentina in late 2001 and subsequent recession hurt exports and tourism in Uruguay, and Uruguay's banking crisis in 2002 was exacerbated by the situation in Argentina. In all, the Argentine economic crisis and its aftereffects caused a 10% contraction in Uruguay's economy. An outbreak of hoof-and-mouth disease among its cattle and an energy crisis in Brazil also adversely affected the economy. By 2002, the total debt stood at around $13.5 billion, some 65% of GDP, and the fiscal deficit stood at around 3% of GDP. Uruguay is diversifying its export base, has a well-run offshore financial center, and has significantly improved the structure of the economy. Foreign direct investment reached $248 million in 2001. Many formerly state-owned sectors had been liberalized by 2003, including insurance, mortgages, road construction and repair, piped-gas distribution, energy generation, water sanitation and distribution, cellular telephones, and airline transportation. In June 2005, the International Monetary Fund (IMF) approved a three-year $1.13 billion Stand-By Arrangement for Uruguay. Oil refining was de-monopolized, but oil imports were to remain a monopoly until 2006.

Uruguay is characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. The economy grew about 10% in 2004 as a result of high commodity prices for Uruguayan exports, the weakness of the dollar against the euro, growth in the region, low international interest rates, and greater export competitiveness. By 2005, it had slowed to 6.2%.

SOCIAL DEVELOPMENT

Uruguay has frequently been referred to as South America's first welfare state. Some legislation dates back to 1829. Social legislation now provides for a day of rest in every week (plus Saturday afternoon), holidays with pay, minimum wages, annual cash and vacation bonuses, family allowances, compensation for unemployment or dismissal, workers' accident compensation, retirement pensions for rural and domestic workers, old age and disability pensions, and special consideration for working women and minors. The state also provides care for children and mothers, as well as for the blind, deaf, and mute. Free medical attention is available to the poor, as are low-cost living quarters for workers.

A dual social insurance program and private insurance system is in place. There is a separate system for bank employees, notaries, university graduates, members of the armed forces, and the police. All other employees and the self-employed are within the program. For pension coverage, employers withhold 15% of each employee's gross earnings and contribute 12.5% of payroll to the appropriate fund. Retirement is set at 60. Maternity and sickness benefits are also provided and are funded by contributions of 3% of earnings by the employee and 5% of payroll from the employer. Maternity benefits are paid at 100% of earnings for up to 12 weeks. Work injury and unemployment insurance are available to all employees.

Women account for nearly half of the work force but tend to be concentrated in lower paying jobs. Nevertheless, many attend the national university and pursue professional careers. Although the law prohibits sexual harassment in the workplace, few claims are filed because it is not viewed as a problem. Spousal abuse is a serious social problem which is receiving greater attention by non-governmental organizations. The number of reported cases has increased dramatically, reflecting a greater willingness by women to confront the problem.

Black minorities, accounting for 6% of the population, are severely underrepresented in politics and in the professions. They face considerable discrimination in education and employment. Occasional reports of the use of excessive force by police are reported each year, and judicial delays can result in lengthy pretrial detention. Human rights organizations operate freely in Uruguay.

HEALTH

The government traditionally has placed great emphasis on preventive medicine and on the sociological approach to public health problems. The US Institute of Inter-American Affairs and the Uruguayan Ministry of Public Health created the Inter-American Cooperative Public Health Service, which built four health centers and clinics. For the region, life expectancy is high (76.13 years in 2005); infant mortality is low (11.95 per 1,000 live births in 2005); and the ratios of doctors and beds to the population are exceptionally good. Approximately 98% of the population had access to safe drinking water and 95% had adequate sanitation. As of 2004, there were an estimated 365 physicians, 86 nurses, and 116 dentists per 100,000 people. Total health care expenditure was estimated at 9.1% of GDP.

The Commission for the Fight against Tuberculosis is under the jurisdiction of the Ministry of Health; as a result of its efforts, tuberculosis is almost unknown in Uruguay today. The commission also deals with the social and economic effects of various diseases.

The major causes of death are heart diseases, cancer, and digestive disorders. Degenerative diseases rank higher as a cause of death in Uruguay than in most other Latin American countries.

As of 2002, the crude birth rate and overall mortality rate were estimated at, respectively, 17.3 and 9 per 1,000 people. Maternal mortality was 26 per 1,000 live births. Contraceptive use was high, with nearly 85% of married women in Uruguay using some method of birth control. Immunization rates for children up to one year old were tuberculosis, 99%; diphtheria, pertussis, and tetanus, 88%; polio, 88%; and measles, 80%.

The HIV/AIDS prevalence was 0.30 per 100 adults in 2003. As of 2004, there were approximately 6,000 people living with HIV/AIDS in the country. There were an estimated 500 deaths from AIDS in 2003.

HOUSING

The housing situation is more favorable in Uruguay than in most Latin American countries. Housing construction, dominated by the public sector, is financed in large part by the Mortgage Bank. The National Institute of Low-Cost Housing builds low-cost dwellings for low-income workers and pensioners.

At last estimate, 98% of all housing units were made of durable materials including stone masonry, wood, zinc, or concrete. Owners occupied more than 55% of all dwellings; nearly 25% were rented; less than 20% were occupied by usufructus (households legally inhabiting someone else's living quarters); and about 1% were occupied by members of housing cooperatives. Of all housing units, more than 90% had private toilet facilities, and nearly 75% had water piped indoors. The preliminary results of the 2004 census indicated that there were about 1,274,052 housing units nationwide.

EDUCATION

Education in elementary, secondary, and technical schools and at the University of the Republic in Montevideo is free. Elementary education, which lasts six years, is compulsory. Secondary education is in two stages of three years. Students may choose to attend a three or four year technical school at the upper secondary level. The academic year runs from March to December.

In 2001, about 62% of children between the ages of three and five were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 90% of age-eligible students. The same year, secondary school enrollment was about 73% of age-eligible students. It is estimated that about 91.8% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 21:1 in 2003; the ratio for secondary school was about 18:1. In 2003, private schools accounted for about 12.9% of primary school enrollment and 11.2% of secondary enrollment.

There are five major universities: the University of the Republic, the Catholic University, the University ORT Uruguay, Universidad de la Empresa, and the University of Montevideo. The University of Trabajo is a state-operated technical school. In 2003, it was estimated that about 37% of the tertiary age population were enrolled in tertiary education programs. The overall adult literacy rate for 2004 was estimated at about 97.7%.

As of 2003, public expenditure on education was estimated at 2.6% of GDP, or 9.6% of total government expenditures.

LIBRARIES AND MUSEUMS

The National Library, founded in 1816, contains over 900,000 volumes, primarily modern but including a sizable historical collection. Other major collections are found in the special libraries of the Council of Secondary, Basic, and Higher Education (110,000 volumes), the Museum of Natural History (200,000), and at the Pedagogic Library (118,000). The University of the Republic in Montevideo (1849) holds nearly one million volumes.

The National Historical Museum exhibits artifacts of local Amerindian cultures and of Uruguayan historical development. The National Museum of Fine Arts has paintings by prominent Uruguayan artists, including Juan Manuel Blanes and Joaquín Torres García. Both are in Montevideo, as are the Museum of Industrial Arts, the Pedagogical Museum, and the Museum of the Discovery, a unique public affairs institution chronicling the impact of the European encounter with the new world. There are regional museums in Mercedes, Salto, San José de Mayo, and Tacuarembo.

MEDIA

The state owns the telegraph and telephone services. In 2003, there were an estimated 280 mainline telephones for every 1,000 people. The same year, there were approximately 193 mobile phones in use for every 1,000 people.

Private broadcasting companies share the airwaves with the state-run public broadcasting company, SODRE. As of 2001, Uruguay had 91 AM and 149 FM radio stations and 20 television stations; color television broadcasting was introduced in 1981. In 2003 there were 603 radios and about 530 television sets for every 1,000 people. In 2003, there were 110.1 personal computers for every 1,000 people and 119 of every 1,000 people had access to the Internet. There were 79 secure Internet servers in the country in 2004.

In 2004 there were at least four major daily newspapers in Montevideo, including El Diario, 170,000, El País, 110,000; El Diario Espanol, 20,000; and Últimas Noticias, 19,500. The first newspaper in the Banda Oriental was the Southern Star, published by the British in 1807 during their brief occupation of Montevideo. El Día, founded by José Batlle y Ordóñez in 1886, helped lay the foundation for the social reforms of the first two decades of the 20th century.

The constitution provides for freedom of speech and the press and these rights are generally respected by the government. The government does retain the right to impose regulations or restrictions on speech and press if a person is inciting violence or insulting the state.

ORGANIZATIONS

The two most important organizations of livestock farmers are the Rural Association and the Rural Federation, both founded by large landowners. Other employers' organizations include the Importers' and Wholesalers' Association and the Uruguayan Exporters' Union. The Chamber of Industries is a powerful organization, with a representative on the Export and Import Control Commission. There are several professional societies, including the National Council for Scientific and Technological Research, which serves also as a primary educational and research organization.

There are student-youth organizations associated with universities and political parties. Scouting and YMCA/YWCA programs are also active. International organizations with national chapters include Amnesty International, Defence for Children International, and the Red Cross.

TOURISM, TRAVEL, AND RECREATION

Tourism, one of Uruguay's major enterprises, enjoys government support. The state owns many hotels along the coast, especially in the area of Punta del Este, 145 km (90 mi) east of Montevideo and one of the more sophisticated resorts in South America. Montevideo has been promoted as the "city of parks" because of its many parks and gardens.

The most popular sport in Uruguay is football (soccer); there is an intense rivalry between supporters of the two major teams, the Peñarol and the Nacional. Other popular sports include basketball, cycling, tennis, pelota, golf, and water sports. Uruguayan soccer teams won the World Cup in 1930 and 1950; the first World Cup competition was hosted by Uruguay in 1930.

All visitors must have a valid passport. Visas are required of all foreign visitors except for the citizens of 63 nations, including Australia, Canada, and the United States. Visas are valid for up to three months. Tourist arrivals numbered 1,508,055 in 2003. There were 18,160 hotel rooms with 41,759 beds. Tourism expenditure receipts totaled $406 million that same year.

In 2004, the US Department of State estimated the cost of staying in Montevideo at $133 per day; elsewhere costs ranged between $133 and $369 per day.

FAMOUS URUGUAYANS

The national hero of Uruguay is José Gervasio Artigas (1764–1850), who led the fight for independence against Brazil and Portugal. Juan Antonio Lavalleja (1786?–1853) directed the uprising that established Uruguay's independence in 1828. The nation's first two presidents were Gen. José Fructuoso Rivera (1790?–1854) and Brig. Gen. Manuel Oribe (1796?–1857), the founders of the Colorados and Blancos, respectively. One of Uruguay's greatest citizens was José Batlle y Ordóñez (1856–1929), who served twice as president of the country. José Pedro Varela (1845–79) was Uruguay's chief educational reformer.

One of the most respected defenders of Latin America's cultural tradition was José Enrique Rodó (1872–1917), whose Ariel and Motivos de Proteo fostered the idea of the superiority of Latin American culture. Juan Zorrilla de San Martín (1855–1933) was a 19th-century romantic poet whose finest work, Tabaré, describes Uruguay at the time of the Spanish conquest. Eduardo Acevedo Díaz (1851–1924) won fame as the writer of a gaucho novel, Soledad (1894). Other significant novelists are Carlos Reyles (1868–1938) and Javier de Viana (1872–1925). Horacio Quiroga (1878–1937) is regarded as one of Latin America's foremost short-story writers. The poets Julio Herrera y Reissig (1875–1910) and Juana de Ibarbourou (1895–1979) have attained a devoted audience beyond the borders of Uruguay. Emir Rodríguez Monegal (1921–85) is considered a leading writer and literary scholar.

The painter Juan Manuel Blanes (1830–1901) is best known for his Episode of the Yellow Fever. Pedro Figari (1861–1938) painted vivid scenes of early 19th-century Uruguay. Joaquín Torres García (1874–1949) founded his painting style on the principles of universalism and constructivism. Eduardo Fabini (1883–1951) is Uruguay's best-known composer. Francisco Curt Lange (b.Germany, 1903–1997), Latin America's foremost musicologist, founded various inter-American institutions and publications for the promotion of music of the Americas.

DEPENDENCIES

Uruguay has no territories or colonies.

BIBLIOGRAPHY

Calvert, Peter. A Political and Economic Dictionary of Latin America. Philadelphia: Routledge/Taylor and Francis, 2004.

Castiglioni, Rossana. The Politics of Social Policy Change in Chile and Uruguay: Retrenchment Versus Maintenance, 1973–1998. New York: Routledge, 2005.

Garretón, Manuel Antonio, and Edward Newman, (eds.). Democracy in Latin America: (Re)constructing Political Society. New York: United Nations University Press, 2001.

Health in the Americas, 2002 edition. Washington, D.C.: Pan American Health Organization, Pan American Sanitary Bureau, Regional Office of the World Health Organization, 2002.

Kohut, David R. Historical Dictionary of the "Dirty Wars." Lanham, Md.: Scarecrow Press, 2003.