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Uruguay - 2004 Election

In October 2004 Tabare Vazquez of the FA coalition won a five-year presidential term in free and fair elections. The FA won 16 of 30 seats in the Senate and 52 of 99 seats in the House of Representatives. The son of a union leader who grew up in a working class district in the capital, President Vazquez took office on March 1, 2005.

He began his political career in 1983 when he joined the Socialist Party. In 1989, he became the first leftist superintendent in Uruguays history and for that reason, a leading figure in his party.

During its years in power, the Vazquez administration made good on its campaign promise to re-examine the human rights abuses committed during the period of military dictatorship and uncovered important forensic evidence. Bilateral relations with Argentina were strained by an ongoing dispute over the construction in Uruguay of a large wood pulp mill on a shared river. Legislation, including a controversial tax reform bill, tended to pass easily as the Frente Amplio enjoyed majorities in both houses of congress.

Vazquez always understood the importance of prudent economic management, as a major factor in his rise to power was Uruguay's economic collapse of 2002. During his time in office, prudent policies and a confluence of positive factors outside of Uruguay's control led to five years of uninterrupted growth. Inflation, always a regional bugbear, is on a downward trend and, despite a slight but brief dip in the first quarter of 2009, Uruguay has proved to be one of the region's most resilient economies; it is one of the few countries in the world not to have slipped into recession during the global downturn. Additionally, Uruguay wisely chose to capitalize on the current decade's commodity price boom, without placing certain restrictions on exports (e.g. export taxes) seen elsewhere in the region.

In addition to setting pragmatic macro-economic policies, the Vazquez government sought fiscal reform by enacting a controversial new income tax in mid- 2007. Tax reform included a reduction in the VAT from 23% to 22% and the elimination of a 3% supplemental tax on imports and local sales of industrialized goods that funded social security (COFIS). The new graduated income tax was designed to increase proportionality among tax payers, and resulted in increased government revenues in the first year after it was implemented. The tax was met with noted consternation among the electorate, especially those in the middle and upper income brackets, but a second reform in September 2009 reduced the burden by raising the standard deduction and allowing a variety of new deductions.

The investment climate remained generally positive, and U.S.-Uruguayan trade relations strengthened during the Vazquez administration. Foreign investors believed they will be treated equally with locals when legal disputes arise, and around 100 U.S. companies were currently doing business in Uruguay. The tourism sector was strong, and Brazilians and Argentines continue to vacation and invest in Punta Del Este, which they viewed as having positive qualities (safety, water quality) lacking in their own beach resorts. The Vazquez administration also worked hard to present the country as a worthy destination to passing cruise ships, and numbers were steadily increasing.

Vazquez kept his promise to strengthen labor rights. Under the leadership of Labor Minister and former Tupamaro guerrilla Eduardo Bonomi, unions enjoyed growth and greater representation. His pro-labor policy stimulated the creation of about 600 unions of various sizes and Uruguay's PIT-CNT, the local equivalent of our AFL-CIO, saw its membership triple (and its power grow proportionally) during this period, to 320,000 from 130,000 members. The Frente also re-established trilateral "wage councils" (comprised of business, union, and GOU reps), which decides on salary adjustments. The Ministry of Labor hired more labor inspectors and was able to provide them with more resources. Under Vazquez, Frente Amplio legislators supported 36 laws designed to benefit workers, including a law to promote greater employee participation in business; collective bargaining in the public sector; expanded retirement options; educational leave for the private sector; and benefits for domestic workers. These moves have not always been popular with business, but built huge new political constituencies.

Understated, calm and authoritative, Vazquez was able to unite the often factious Frente Amplio coalition, lead it into power, and leave with it as the country's most potent political force. Furthermore, Vazquez appears to have been able to manage all that while sticking to principles he outlined on the 2004 campaign trial: democracy, innovation, integration, increased productivity, and universal social welfare.

Arguably the most public weakness of Vazquez's administration has been his government's record on public security. Long a source of steadily mounting concern among Uruguayans, the issue flowered into a hot topic during the recent elections. Both crime and drug use continued to rise under Vazquez's administration. A poll towards the end of 2009 found that just under half the electorate felt the government had done nothing to address public security, while 36 percent believed that they had done very little.

While Vazquez and president elect Jose Mujica regularly expressed differences, during the election campaign Mujica knew that his and the FA's fortunes rested largely on being able to credibly project a sense of continuity, which he was able to do. Since winning the elections, Mujica often made clear that he intends to follow many of Vazquez's policies closely.

President Vazquez's job approval rating had been unusually high. In 2010, Uruguayan communications media released a survey that revealed Tabar Vazquez to be the most popular political in Uruguay with 70 percent popularity rating and 17 percent who opposed him. The survey found the present Uruguayan president, Jos Mujica, to be ranked second, with 66 percent approval and 20 disapproval rating, respectively.





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