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In 2001, the government of President Jorge Batlle wrestled with the effects of economic turmoil caused largely by neighboring Brazil's 1999 currency devaluation and an ongoing financial crisis in Argentina. The two countries account for some 45 percent of Uruguay's exports. Declines in industry and construction led the economic contraction, with unemployment increasing to nearly 16 percent, and an April outbreak of foot-and-mouth disease in cattle created an additional headache for a country in which beef shipments make up nearly 20 percent of total exports. In July a 24-hour strike by Uruguay's labor confederation, the third since Batlle took office in March 2000, brought the country's public sector to a standstill in protest against the government's inability to revive the stagnant economy and to cut joblessness. Financial experts credited the government's sound macroeconomic and fiscal policies for enabling the country to weather the storm as well as it had.
After gaining independence from Spain, the Oriental Republic of Uruguay was established in 1830. The Colorado Party dominated a relatively democratic political system throughout the 1960s. The 1967 constitution established a bicameral congress consisting of a 99-member chamber of deputies and a 31-member senate, with every member serving a five-year term. The president is also directly elected for a five-year term.
An economic crisis, social unrest, and the activities of the Tupamaro urban guerrilla movement led to a right-wing military takeover in 1973, even though the Tupamaros had been largely crushed a year earlier. During the period of military rule, Uruguay had the largest number of political prisoners per capita in the world and was known as "the torture chamber of Latin America." Civilian rule was restored through negotiations between the regime and civilian politicians. Julio Sanguinetti won the presidential elections in 1984 with military support. In 1989 Luis Alberto Lacalle was elected president as the candidate of the centrist National Party, Uruguay's other traditional political grouping. His popularity plummeted, however, as he attempted to liberalize one of Latin America's most statist economies.
In the 1994 campaign, Sanguinetti ran as a social democrat. The two other main contenders were the leftist Broad Front's Tabare Vasquez, a moderate socialist medical doctor, and the National Party's Alberto Volante. The 1994 election was the closest ever. The Colorado Party won 31.4 percent of the vote; the National Party, 30.2 percent; and the Broad Front, 30 percent.
Sanguinetti took office in March 1995 and enjoyed considerable congressional support, in part as a result of the inclusion of numerous National Party members in his cabinet. He won legislative support for an austerity package that partially dismantled the country's welfare state. A series of labor stoppages and a sharp decline in Sanguinetti's popularity followed.
In 1998, the National Party was wracked by mutual accusations of corruption, mostly dating from the time of the Lacalle government. In 1999, public safety and 11 percent unemployment continued to be primary concerns. On October 31, Vasquez, a popular mayor of Montevideo, won 39 percent of the vote against Batlle's 31.7, in the first round of the presidential contest. By establishing itself as the single largest political force in the country--winning 40 of 99 seats in the lower house and 12 of 31 in the senate--the Uruguayan left appeared to seriously challenge the country's traditional, but ailing, two-party system. Just three weeks before the final round of voting, the chief of the Uruguayan army, General Fernan Amado, warned that human rights violations committed during the previous dictatorship were "a closed chapter."
In the second round, the National Party backed Batlle, a 72-year-old senator and five-time presidential candidate whose father and great-uncle had been respected Colorado party presidents. Faced with dismal economic prospects and a choice between presidential candidates representing the moderate right and an eclectic left, in 1999 Uruguayans gave Batlle 52 percent of the vote. Upon taking office, the new president incorporated several National Party members into his cabinet.
Batlle immediately sought an honest accounting of the human rights situation under a former military regime whose widely acknowledged viciousness had turned Uruguay's reputation as the "Switzerland of Latin America" on its head. Within days of his inauguration, Batlle personally helped the Argentine poet Juan Gelman to track down a granddaughter born in captivity and adopted by a Uruguayan military family. However, Batlle faced a delicate balancing act at national reconciliation, with the armed forces and former leftist guerrillas saying that they had nothing to apologize for, and members of his own party deeply offended that Batlle was stirring up the past.
Batlle's help to Gelman, a one-time Montonero guerrilla whose son and daughterin- law were killed by the Argentine military, was seen as an affront to Battle's longtime rival Sanguinetti, who had accepted throughout his two terms the Uruguayan military's apparent inability to locate the poet's granddaughter. Sanguinetti's supporters claimed that Batlle's actions were designed to embarrass the former president. In August 2000, the Uruguayan government appointed a peace commission of leading citizens and human rights activists to look into the fate of 164 Uruguayans who had disappeared in Uruguay and neighboring Argentina during the 1973--1984 dictatorship. Both Sanguinetti and Lacalle condemned the action, saying it had been ruled out by a 1986 amnesty that was ratified by a referendum three years later. At the same time, Batlle's honeymoon with the left, based largely on his willingness to seek answers to what had happened during the military regime, was severely tested by the president's equally firm determination to reduce spending and taxes and to privatize previously sacrosanct state monopolies. In 2001, the crisis-ridden rural sector and an increase in violent crime, in what was still one of Latin America's safest countries, dominated much of the public's attention. Metropolitan Montevideo, with about 1.4 million inhabitants, is Uruguay's only large city and contains most of the highest crime areas.
Citizens of Uruguay can change their government democratically. In 1999, for the first time, Uruguayan parties selected a single presidential candidate in open primary elections. Previously, the parties had fielded a number of candidates, and the candidates with the most votes then accumulated the votes cast for the others. Constitutional guarantees regarding free expression, freedom of religion, and the right to form political parties, labor unions, and civic organizations are generally respected. The former Tupamaro guerrillas now participate in the system as part of the Broad Front. Uruguayans of all political tendencies pride themselves on their refusal to make a public issue of the private lives of public officials.
The judiciary is relatively independent, but has become increasingly inefficient in the face of escalating crime, particularly street violence and organized crime, which continued to be a major issue in 2001. The court system is severely backlogged, and suspects under arrest often spend more time in jail than they would were they to be convicted and serve the maximum sentence for their alleged crime. Allegations of police mistreatment, particularly of youthful offenders, have increased; however, prosecutions of such acts are also occurring more frequently. Prison conditions do not meet international standards.
Uruguay, long a haven for anonymous foreign bank deposits as a result of its strict bank secrecy laws, has also taken measures to regulate financial activities in order to reduce the potential for money laundering. October 1998 saw the passage of antidrug legislation that made narcotics-related money laundering a crime. A Financial Investigations Unit (FIU) has been established in order to present more complete evidence in narcotics-related prosecutions. Upon the request of the Central Bank, financial institutions must provide certain information, and banks (including offshore banks), currency exchange houses and stockbrokers are required to report transactions of more than $10,000. The FIU also requires all entities under its jurisdiction to report suspicious financial transactions to a financial information analysis unit. Since President Jorge Battle took office in March 2000, the Organization of American States (OAS) and the U.S. government have provided the Central Bank with computers and software with which to maintain a database and analyze patterns of transactions. Foreign analysts say that financial investigations, which are not routine and must be court-ordered, have been effective in identifying inappropriate accounts on some occasions. The Uruguayan Coast Guard recently improved its computerized network and database in order to record persons and vessels passing through Uruguayan territorial waters.
In 2001, there was some concern that Middle Eastern terrorists might be using Uruguay as a transit country, a worry heightened by two terrorist outrages committed in Buenos Aires in the mid-1990s and by the detention of three suspected members of the terrorist organization Islamic Group in 1998. The activities of a small but virulent number of neo-Nazi activists and skinheads were also closely monitored. In 1999, a neo-Nazi group set off three bombs in vacant lots in Montevideo's poorer neighborhoods.
The Transparency Law (Ley Cristal) entered into force in January 1999. It criminalizes a broad range of potential abuses of power by government officeholders, including the laundering of funds related to public corruption cases. It also requires financial disclosure statements to be filed by high-ranking officials. Public officials who know of a drug-related crime or incident and do nothing about it may be charged with a "crime of omission" under the Citizen Security Law. Uruguay ranks near the top of public transparency ratings for Latin America issued annually by Transparency International, and on an "opacity index" created by PriceWaterhouseCoopers (PwC), a major U.S. accounting firm.
In 1991, the Inter-American Commission on Human Rights of the OAS ruled that the 1985 law granting the military amnesty from rights violations during the years of dictatorship violated key provisions of the American Convention on Human Rights. (During Julio Sanguinetti's first government, from 1985 to 1990, a military commission he appointed cleared the armed forces of responsibility for hundreds of brutal detentions and the disappearances of more than 150 Uruguayans at home or in neighboring countries.) Sanguinetti remained steadfast in refusing to accede to further investigations of the issue, a policy that was reversed by Batlle.
The press is privately owned, and broadcasting is both commercial and public. Numerous daily newspapers publish, many associated with political parties; there are also a number of weeklies. In 1996 a number of publications ceased production because of a government suspension of tax exemptions on the import of newsprint. In addition, a June 1996 decree requires government authorization to import newsprint.
Civic organizations have proliferated since the return of civilian rule. Numerous women's rights groups focus on violence against women, societal discrimination, and other problems. The small black minority continues to face discrimination. Uruguay's continuing economic crisis has forced thousands of formerly middle-class citizens to join rural migrants in the shantytowns ringing Montevideo.
Workers exercise their right to join unions, bargain collectively, and hold strikes. Unions are well organized and politically powerful. Strikes are sometimes marked by violent clashes and sabotage.