Crisis in Utopia
ALEXANDER, ROBERT J.
REPORT FROM URUGUAY Crisis in Utopia By Robert J. Alexander Montevideo The Republic of Uruguay, long famous as the "Utopia of the Rio de la Plata" and the "Switzerland of South America," faces...
...The upshot: Big Montevideo packinghouses find themselves without cattle to slaughter and must import thousands of head from Argentina, while the Government has a wheat surplus it cannot handle...
...Almost half the employed workers in Montevideo, which has over a third of Uruguay's total population, work for the Government or one of its economic "autarchies...
...That situation will probably get worse before it gets better...
...Paring down the number of Government employes, and placing the rest on an eight-hour day, would mean dismissing many good Battlista voters a great sacrifice for a Batllista-led government...
...Furthermore, while neighboring Argentina has continually modernized its grazing methods, Uruguay continues to operate on antiquated lines...
...The latter include the Government-owned packinghouse, the alcohol and gasoline monopoly, and various other organizations...
...But with the decline in packing and the drop in the world price of wool, Uruguay's other major export, these profits have dried up...
...For were the Government to attack any of these economic ills, it would have to step on important political toes...
...But such a change can do little to alter the facts of Uruguay's economic life...
...This was an old dream of Jose Batlle, who thought that nine "presidents," instead of a single chief executive, would reduce the chances of dictatorship...
...three represent the opposition Partido Nacional...
...Six of its nine members belong to the majority, in this case the Fifteener Batllistas...
...There is widespread dislike of American- and British-owned packinghouses...
...it may be virtually impossible if the Fourteeners go into outright opposition...
...The Consejo's strangest aspect is that the opposition is represented...
...For the last five years, Uruguay has lived under a Council of Government instead of a President...
...The backbone of its economy has traditionally been grazing -raising cattle and sheep and processing meat and wool for export to Europe...
...After the last election, in 1954, the two Batllista factions worked together, with representatives of both in the Cabinet...
...Their salaries have not gone up in almost five years, while prices have climbed steadily...
...Thus, Uruguayan cattle are usually not slaughtered until they are four years old...
...A number of factories have closed in the last two years, and unemployment is rather extensive...
...Uruguayan Government bonds, which were selling at par several years ago, are now priced at 79...
...But since the war there has been a melding of the two classes, with many landowners investing in industry and many industrialists buying rural land...
...Some years ago, the prospect of such a clash would not have inhibited a Batllista government, because the Battlistas represented, in general terms, the urban middle class, while the Nacionalistas spoke for the big landowners...
...The internal market has absorbed all the wheat it can, and the Government subsidy makes Uruguayan wheat too expensive for foreign markets...
...Though Uruguay lacks industrial raw materials, the Government has protected manufacturing at high levels for several decades...
...Bringing the matter to a head is the present demand of Government employes for a wage increase...
...The Uruguayan grazer, supporting his cattle twice as long, gets half the "crop" for the same acreage as his Argentine counterpart...
...As yet, the Government has done little to resolve these problems, because there is a political as well as an economic crisis...
...But there is now much dissatisfaction with the Consejo de Gobierno...
...One faction is headed by Batlle's nephew, Luis Batlle Berres...
...It has been hard enough till now to get Government legislation through Congress...
...Unfortunately, it may be found easier to twist Uncle Sam's beard than to come to grips with the country's problems...
...Again, the local market has been more or less satisfied, and the expensiveness of the Uruguayan product bars effective competition abroad...
...In any ease, a change of regime is in the air...
...Until recently, the institutes diversified their investments, hut now the Government is forcing them to buy its bonds...
...Thus there is no longer a clear economic distinction between the two major parties...
...Equally serious is the situation in industry...
...For many years, the Government has been making ends meet by profits on currency manipulation...
...Government employes work only half a day, and there is no civil service: Jobs are apportioned according to political agreements among the parties sharing in the Administration...
...Some of the other problems involve even more serious political risks...
...For example, to change the wheat policy and encourage a renewal of grazing would antagonize farmers with heavy investments in wheat...
...Textiles are hardest hit...
...This cannot go on much longer, because the income from Government bonds is not sufficient to permit the institutes to meet their obligations...
...The two factions are known as Fifteeners and Fourteeners respectively, after the numbers of their respective election tickets...
...So wheat is now being used as fodder...
...But the Fourteeners have just walked out, leaving the Government with a minority in Congress...
...There is much complaint in the press about U.S...
...High protection has deprived textile manufacturers of incentive to modernize, thus keeping costs high...
...But the grazing industry has changed significantly during the last fifteen years...
...Many cattle-ranchers switched to wheat...
...Finally, Government finances are shaky...
...The Fifteeners of Luis Batlle Berres are the majority group, but their foes are well represented in Congress...
...the other by his son, Cesar Batlle Pacheco...
...This party was established within the traditional Partido Colorado by Jose Batlle, the great innovator of the first quarter of this century, who introduced social security, the "yardstick principle" in industry, and various other changes which gained Uruguay a reputation as the most socially advanced nation on the continent...
...The banks are no longer willing to buy them, and individual buyers are scarce...
...Industry, too, has now reached the saturation point...
...The principal source of borrowed funds still available to it is the social-security institutes retirement and pension funds which cover virtually all workers...
...But the Batllista party has now split...
...During World War II, the Uruguayan Government began a campaign to grow wheat, offering high prices...
...the Argentines kill theirs at two...
...For some time now, the Government has had to borrow, and it is becoming increasingly difficult...
...Some Batllistas now advocate a return to a single president: others think the Constjo should he made homogeneous...
...whose role has been frankly one of obstruction...
...The proposed wage raises would increase the Government's operating budget by about a third and the Government doesn't have the money...
...In any case, there is a strong nationalist tide running, which politicians may find it practical to exploit...
...Changing the Government's policy toward industry might increase unemployment...
...although Uruguay has some just grievances against the United States...
...Many of them are already behind in making retirement payments...
...dumping of wheat in markets which Uruguayans feel might be theirs...
...Since the end of the dictatorship of 1933-42, Uruguay has been governed by the Partido Colorado Batllista...
...It will take real political courage and statesmanship to resolve the economic and political crisis that is now facing Uruguay...
...at least temporarily, and this, too, is politically dangerous...
...To meet this crisis, many people are thinking of revising the form of government...
...anti-Yanquism" is not a sufficient answer to its problems...
...REPORT FROM URUGUAY Crisis in Utopia By Robert J. Alexander Montevideo The Republic of Uruguay, long famous as the "Utopia of the Rio de la Plata" and the "Switzerland of South America," faces serious economic and political troubles...
Vol. 39 • June 1956 • No. 23
