Posted on 06/15/2002 1:26:38 AM PDT by Cincinatus' Wife
MONTEVIDEO, Uruguay (Reuters) - Hugo Uriarte and his old factory buddies gather around a table every Tuesday to drink an espresso and chat about their grandchildren, soccer and life since they were all laid off six years ago.
They have one rule: grumbling about the economy is forbidden.
Still, as a four-year recession shows no sign of ending, Uriarte cannot help but wonder if a decade of painful reforms has left his tiny country of Uruguay with its back broken.
"We sound like a bunch of old geezers who have been left behind," Uriarte said, grinning weakly as his blue eyes sweep over the elegant downtown cafe. "But we all lost our jobs to foreign competition. And there is this feeling that all the changes Uruguay has made haven't helped most people."
Many Uruguayans, disgusted by a sea of abandoned, rusting factories, long for a return to the "good old days" of trade protectionism as much of Latin America shifts back to the ideological left after prying open economies in the 1990s.
Like in neighboring giant Brazil, polls show a leftist candidate could win presidential elections in Uruguay in 2004, a shock to many since the mostly middle-class country has actually lagged behind its neighbors in slashing tariffs.
Uruguay's 3 million people enjoy the region's highest incomes and live in what was long called the "Switzerland of South America" due to the region's first established welfare state with free public health and education.
However, a walk down the crumbling sidewalks of Montevideo, lined by ornate but soot-covered buildings erected by European immigrants at the turn of the 20th century, betrays simmering tensions under Uruguay's legendary surface calm.
Burly port workers and textile shop owners alike point to chronically high unemployment of about 15 percent, this year's run on the once-solid banks and frustration at what they say are hypocritical U.S. trade policies.
Heavily damaged by this year's spectacular economic meltdown in its other neighbor, Argentina, Uruguay's economy contracted 10 percent in the first quarter of 2002 as its reputation as a tourism and banking oasis took a huge hit.
"We Latin Americans need to decide what kind of countries we want to have," said Hugo, who has owned a watch store for 25 years and who declined to give his last name. "Were the reforms a mistake? Is there any alternative? I don't know. But a lot of people are wondering."
UNABLE TO FIT IN
Dented 1950s-era cars rumble down Uruguay's hilly rural roads, testimony to the country's long legacy of closing off its borders to competition. Although the last decade brought long-needed investment, the conservative country has rejected some privatizations in referendums over the last decade.
Many blame the economic implosion of Argentina on excessive zeal for slashing of tariffs and privatizations that were long advertised in the region as a sure road to prosperity.
Juan Maldini, 28, looks across the muddy River Plate which separates his Ohio-sized country from Argentina and wonders aloud whether he will ever find another job besides hawking postcards to a diminishing tide of tourists.
"They say Uruguay's economy consists of beaches, banks and cattle," Maldini says, holding up a postcard picturing a few dairy cows, which outnumber people in Uruguay by three to one. "I don't know where I fit in."
A university degree in architecture has been worthless for him and most of his classmates, Maldini says. "There's no construction of anything right now. I know Uruguay's economy wasn't good when my dad was alive but at least he had a steady job with benefits."
Maldini's father lived in Uruguay in an age where massive tariffs and state subsidies ensured nearly full employment, but also gave rise to grossly inefficient industries and a dearth of investment that sent poverty soaring.
By the mid-1970s, the crushing costs of supporting a bureaucracy that by then even included state-run bakeries led to tariff and subsidy cuts.
Free trade deals and limited privatizations picked up in the 1990s, leaving many jobless but dynamizing the economy. Uruguay's relatively low 25 percent poverty rate today contrasts sharply with a region that has long suffered the world's biggest gap between rich and poor.
That is precisely why such broad disenchantment in Uruguay today worries many observers.
"If even Uruguay is showing strains, then the rest of Latin America is certainly worse off," said Nicolas Shumway, head of Latin American studies at the University of Texas. "You're seeing a tidal change away from the naive neoliberalism of the last decade. People have been deeply disappointed."
JOBLESS LINES
Very few in Uruguay advocate a total return to the closed market policies that are blamed for its long stagnation. Indeed, steady growth in the 1990s of 3 percent per year made it one of the only countries in Latin America where the gap between rich and poor actually narrowed.
"I don't think many businesses see major changes ahead," said Daniel Soloducho, president of the Uruguayan Exporters' Union and CEO of Dancotex, a major textile firm that produces wool sport coats. "I think in the long term Uruguay will remain very open to exports and trade."
"Some changes need to be made, and it's logical that there is some fatigue due to the recession," Soloducho said. "But most people realize the reforms have helped Uruguay greatly."
Just a few blocks from Soloducho's factory on the outskirts of Montevideo, a line of about 35 people forms of people applying for five positions at a hardware store.
Gabriel Oddone, an economist for local CINVE think-tank, said the number of people right near the median income level tumbled sharply during the last decade, pushing salaries either way up or way down as people fit into the new economic model or dropped out.
"During the last decade, reforms meant that Uruguay had more winners and more losers," Oddone said. "And there are few things more dangerous politically than a middle class that has been pushed into poverty."
Politicians have seized on such angst elsewhere. Leftist presidential candidate Luiz Inacio Lula da Silva leads polls for Brazil's elections in October. Former paratroop officer Hugo Chavez has held onto power in Venezuela due largely to his popularity among the poor. Argentine politics are wide open.
In Uruguay, many talk of a slowdown in privatizations, an increase in certain tariffs or a currency devaluation as ways to combat a slump that began in 1999 with Brazil's devaluation and has deteriorated this year due to Argentina's collapse.
Back at the cafe in Montevideo, Uriarte, who now drives a cab to make ends meet after losing his job at a television factory, has more simple desires.
"I don't care if the government is left, right, up or down," Uriarte said. "We just want a better country. I don't think we're on the right track right now."
Perhaps they need to drop the socialism part of their government, it's bleeding true reform.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.