Given the growing economic and social crisis, it was not surprising that the Colorado Party won the November 1966 elections. In March 1967, General Oscar Gestido (1967), a retired army general who had earned a reputation as an able and honest administrator when he ran the State Railways Administration, became president. He was supported by the Colorado and Batllist Union (Unión Colorada y Batllista--UCB), comprising List 14 and other conservative Colorados.
Between June and November of 1967, the government, with the influence of some Batllists, attempted to reverse economic and social policies implemented since 1959 and to return to the old developmentalist model. But in November, César Charlone, responsible for economic policies under Terra, became head of the Ministry of Economy and Finance. He agreed to the IMF's suggestions, again establishing a unified exchange market and drastically devaluing the currency. Inflation exceeded 100 percent in 1967, the highest in the country's history.
In December President Gestido died and was succeeded by his vice president, Jorge Pacheco Areco (1967-72). A little-known politician and former director of the newspaper El Día, Pacheco would leave an indelible mark on Uruguay. Within one week of taking office, Pacheco issued a decree banning the PSU and other leftist groups and their press, which he accused of subverting the constitutional order and advocating armed struggle. To implement the new monetarist policy adopted in 1968, Pacheco appointed Alejandro Végh Villegas as director of the Office of Planning and Budget. In a sharp policy change, Pacheco decreed a wage and price freeze in June 1968 to try to control inflation. He also created the Productivity, Prices, and Income Commission (Comisión de Productividad, Precios, e Ingresos-- Coprin) to control the price of basic food items. In 1968 real wages were the lowest in the decade, and inflation reached a maximum annual rate of 183 percent that June.
The newly created umbrella labor organization, the CNT, resisted these economic policies, and student and other social conflict intensified. The government responded by repressing strikes, work stoppages, and student demonstrations. The death of a student, Líber Arce, during a protest paralyzed Montevideo, and relations between the University of the Republic and the government further deteriorated. The prompt security measures, a limited form of a state of siege, which had been included in the constitution to deal with extraordinary disturbances of domestic order and applied in 1952 and 1965, were enforced during almost all of Pacheco's time in office. He justified his actions, which included drafting striking bank and government employees to active military service, on the basis of the growing urban guerrilla threat from the Tupamaros.
During this period, the Tupamaros had grown in strength, and their actions--robberies, denunciations, kidnappings, and, eventually, killings--shook the country and became known worldwide. The General Assembly acquiesced twice in the suspension of all civil liberties, once for twenty days following the assassination in August 1970 of Dan A. Mitrione, a United States security official, and then for forty days following the kidnapping of British ambassador Geoffrey Jackson in January 1971--both by the Tupamaros. On September 9, 1971, after the escape from prison of more than 100 Tupamaros, Pacheco put the army in charge of all counterguerrilla activity.
The November 1971 national elections were held in a relatively quiet atmosphere because of a truce declared by the Tupamaros. Uruguayan society had become polarized. Political sectors supporting Pacheco promoted his reelection to a new presidential term, as well as the corresponding constitutional amendment to legitimize it. The left was able to unite and draw supporters from traditional parties, such as the Colorado Party's List 99. The new coalition was named the Broad Front (Frente Amplio). In the National Party, a faction of Herrerists chose General Mario Aguerrondo, considered a hard-liner, as its presidential candidate. Liberal Blancos supported the reformist program of a new movement, For the Fatherland (Por la Patria-- PLP), led by Senator Wilson Ferreira Aldunate.
The constitutional amendment did not succeed, but Pacheco's handpicked successor, Juan María Bordaberry Arocena of the Colorado Party, won the controversial elections by some 10,000 votes, after a mysterious halt in the vote count. It was noteworthy, however, that Ferreira obtained a large number of votes (he was actually the candidate receiving the most votes--26 percent of the total to Bordaberry's 24 percent), and the left increased its following, receiving about 18 percent of the votes. Bipartisan politics had come to an end, replaced by a multiparty system bitterly divided by political, social, economic, and ideological differences. In economic terms, the stabilization measures taken between 1969 and 1971 by the Pacheco administration to increase wages and reduce inflation had been moderately successful. But by 1972, the situation was out of control again. Another free market, monetarist experiment would have to await the imposition of an authoritarian regime.
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