Brazil & Southern Cone - September 2012 (ISSN 1741-4431)

Former president Tabaré Vázquez (2005-2010) might be preparing to have another tilt at the presidency in 2014. Vázquez retired from political life last October after making a serious gaffe by candidly, and publicly, admitting that he considered war scenarios with Argentina when the dispute over the construction of a pulp mill on the Uruguayan side of the shared River Uruguay reached fever-pitch in 2007. According to a survey published by local pollster Equipos Mori in early September, however, Vázquez is by some distance the most popular politician in Uruguay. In the absence of any clear candidate to succeed President José Mujica, Vázquez is the strongest option to unite the disparate ruling left-wing coalition Frente Amplio (FA).

Vázquez enjoys 63% popularity in the Equipos Mori poll. The most popular opposition politician was Jorge Larrañaga of the centre-right Partido Nacional (PN, Blancos) with 36%, followed by Pedro Bordaberry, the leader of the right-wing Partido Colorado (PC; Colorados) with 33%.

Vázquez announced his retirement from public political activity last October on the grounds that he had inadvertently caused diplomatic tensions. Speaking to 20 former pupils of the Colegio Monte VI School in Montevideo, he had explained that in 2007, at the height of tension over the Botnia (now UPM) pulp mill being constructed on the banks of the River Uruguay, he had asked the-then US President George W. Bush and Secretary of State Condoleezza Rice whether the US would back Uruguay in the event of hostilities breaking out with Argentina (see sidebar).

The reaction within the FA at the time was telling: it appeared more incensed at the appeal for assistance from the US than a hypothetical war with Argentina. The FA leadership committee actually argued that Vázquez should be honoured for his honesty. But the opposition leapt on his infelicitous remark, with Bordaberry commenting that “the years are clearly catching up with Vázquez; you cannot glibly say these things in chats with school children; there is a reason why serious countries declassify archives 20 years after the event.”

The decision by Vázquez to withdraw from public life demonstrated that he had not entirely lost his shrewd head for politics, however. He calculated, correctly, that the dust would settle in time. The FA is still agonising over who could lead the coalition into the next elections in 2014, with the consensus being that Vázquez stands alone in being able to unite the disparate groupings. If he were to run, he would certainly not be a popular choice in Buenos Aires, but this could well stand in his favour. There is growing irritation with the protectionist course pursued by the administration of President Cristina Fernández and President Mujica is under mounting pressure to stand up to his peer across the River Plate.

The Equipos Mori survey suggests that the only other FA politician who could conceivably win public support for a presidential bid is the incumbent Vice-President Danilo Astori, who polled 48%. But, Astori, who is the standard bearer for the moderate leftist parties in the coalition, would never be able to unite the heterogeneous FA in the way that Vázquez can. A separate poll by Equipos Mori showed that the approval rating of President Mujica sank to just 39% in July, its lowest level since he took office in March 2010, although it is worth noting that Vázquez’s approval rating also hit a nadir at this point of his presidency before steadily climbing afterwards. In April, the previous poll conducted by Equipos Mori, Mujica enjoyed a 47% approval rating.

Equipos Mori put forward any number of possible reasons for the erosion of Mujica’s support. It highlighted Paraguay’s suspension from the Southern Common Market (Mercosur) and the rear-door entry of Venezuela into the bloc, which put Mujica and Astori at loggerheads and left the sensation that the FA might be eschewing more moderate for more radical leftist politics – a source of constant tension within the coalition. The polling firm also flagged up the Mujica administration’s proposed legalisation of marijuana, which is currently before congress; the replacement of the most popular minister in the cabinet Héctor Lescano, the tourism and sport minister, for no apparent reason; and a feel-bad factor surrounding the bankruptcy of the flagship carrier Pluna (see sidebar), which the government was unable, or unwilling, to rescue, as possible reasons for the decline in Mujica’s support.

All of these factors could have influenced his approval rating, but there is also a concern that the public is growing weary of Mujica’s failure halfway through his mandate to deliver on key promises, such as a sweeping reform of the State to improve efficiency and reduce red tape. Uruguay has been growing at an impressive rate for more than five years now, but excessive bureaucracy is probably one of the main obstacles to sustained high growth. Mujica is aware of it. But, despite enjoying a majority in both the lower chamber and the senate, he has been unable to push through what he himself describes as “the mother of all reforms”.

Uruguay slipped in the latest annual report of the Global Competitiveness Index (GCI) of the World Economic Forum (WEF) which was released this month, finishing in 74^th out of 144 countries worldwide, down from 63^rd last year. In certain sub categories Uruguay performed woefully, for instance finishing in 136^th place for ‘labour market efficiency’, with restrictive labour regulations deemed to be by far the most problematic factor for doing business. It also performed poorly in terms of wastefulness of government spending and the burden of government regulation, coming in 95^th and 89^th place respectively.

Frustration at Mujica’s failure to push through a meaningful education reform despite winning broad cross-party political consensus for such a reform will also have been intensified by the country’s performance on this front in the GCI. Uruguay finished in a lowly 107^th place for the quality of the educational system and in 118^th place for the quality of maths and science education.

Bolivia in Mercosur?

President Mujica argued last month that Mercosur was going through “an institutional crisis”. He demanded greater flexibility, given the protectionist trade barriers erected by Argentina. He said Uruguay was negotiating a trade deal with Peru and was keen to cement further trade deals bilaterally.

Roberto Conde, Uruguay’s deputy foreign minister, welcomed Bolivia’s application for full membership of Mercosur after meeting his peer Juan Carlos Alurralde in early September. Conde said that Uruguay would offer all its support for Bolivia’s incorporation and, pointedly, help the country “not to lose any of the trade preferences it enjoys through other accords with third countries”. Alurralde added: “We can’t forget that Uruguay will be holding the chair of Mercosur next year and starting in January 2013 a host of activities are going to be defined including a critical path for Bolivia to join the group as a full member”.

• Vázquez’s gaffe

Former president Vázquez also revealed during his frank presentation to Montevideo school pupils last October that he had discussed Uruguay’s military capabilities with the heads of the three branches of the armed forces, and received this unequivocal response from the commander of the air force: “we have five planes and fuel for 24 hours; if our five planes leave, none of them will return”.

• Pluna

The Mujica administration liquidated Pluna, the country’s flag carrier airline, on 9 July, putting an end to its 76-year history. The airline was first established in 1936 and fully nationalised in 1951. The government found private sector partners in 1995 to help it run the company but it continued to be plagued with financial problems. On 15 June the government reached an agreement with the Argentine firm, Leadgate, which owned 75% of Pluna, to leave the airline in an “orderly fashion” to allow the State to find a more suitable partner. It failed to find such a partner in the month it gave itself and sold off all Pluna’s assets, including its seven planes, in order to raise funds to pay off the company’s debts