Political and Economic Situation

On November 29, 2009, Senator José "Pepe" Mujica of the ruling center-left Broad Front (FA) coalition was elected president of Uruguay in a second-round runoff vote. In legislative elections held concurrently with the October 25, 2009, first-round vote, the FA retained its majorities in both houses of the Uruguayan Congress. The new legislature and President are to be inaugurated to their respective five-year terms on February 15 and March 1, 2010. Mujica will replace popular incumbent President Tabaré Vázquez, who was constitutionally ineligible to run for a second consecutive term. By winning the presidency and securing FA majorities in both houses of the Uruguayan Congress, Vázquez ended 170 years of political domination by the National (PN) and Colorado (PC) parties and ushered in the country's first left-leaning government. Throughout his term, President Vázquez has followed the moderate social democratic paths of the left-of-center governments of Brazil and Chile, advancing market-oriented economic policies while instituting social welfare programs intended to reduce poverty and inequality. The Vázquez Administration's economic and social welfare policies, along with the recent boom in commodity prices—which significantly affect Uruguay's primarily agricultural economy —have contributed to several years of strong economic growth and considerable reductions in poverty. Human Rights

Vázquez and the FA have done much to address Uruguay's dictatorship-era (1973-1985) human rights violations, which had been largely ignored by other administrations. Mujica defeated former President Luis Alberto Lacalle (1990-1995) of the center-right PN, 53% to 43%. U.S.-Uruguay Relations

Uruguay enjoys friendly relations with the United States, though it traditionally has had closer ties to Europe (the origin of the vast majority of the population) and its South American neighbors. Ties between Uruguay and the United States have increased in recent years, especially since the administration of Jorge Batlle (2000-2005), which closely aligned itself with the United States. Likewise, the Vázquez Administration has sought to strengthen ties with the United States in order to diversify its trade relations and reduce its economic reliance on Argentina and Brazil, which played a significant role in the country's 1999-2002 recession. The joint commission has provided the means for ongoing U.S.-Uruguay trade discussions, which led to the signing of a bilateral investment treaty in October 2004 and a Trade and Investment Framework Agreement (TIFA) in January 2007. On September 14, 2009, the ATPDEA Expansion and Extension Act of 2009 ( S. 1665 , Lugar) was introduced in the Senate. Among other provisions, the bill would amend the Andean Trade Promotion and Drug Eradication Act (Title XXXI of the Trade Act of 2002, P.L. 107-210 ) to provide unilateral trade preferences to Uruguay. Under the bill, certain Uruguayan products, such as wool-based textiles, would be eligible to receive duty-free or reduced tariff treatment until December 31, 2012.
On November 29, 2009, Senator José "Pepe" Mujica of the ruling center-left Broad Front coalition was elected president of Uruguay, a relatively economically developed and politically stable South American country of 3.5 million people. Mujica, a former leader of the leftist Tupamaro urban guerilla movement that fought against the Uruguayan government in the 1960s and 1970s, defeated former President Luis Alberto Lacalle (1990-1995) of the center-right National Party in the country's sixth consecutive democratic election since its 12-year dictatorship ended in 1985. Mujica was forced to contest a runoff after he failed to win an absolute majority of the vote in the October 2009 first-round election. In legislative elections held concurrently with the first-round vote, the Broad Front retained its majorities in both houses of the Uruguayan Congress. The new legislature and President are to be inaugurated to their respective five-year terms on February 15 and March 1, 2010.
Mujica will replace popular incumbent President Tabaré Vázquez, who was constitutionally ineligible to run for a second consecutive term. Vázquez's 2004 victory ended 170 years of political domination by the National and Colorado parties. Throughout his term, Vázquez has followed the moderate social democratic paths of the left-of-center governments of Brazil and Chile, advancing market-oriented economic policies while instituting social welfare programs intended to reduce poverty and inequality. The Vázquez Administration's policies appear to have been reasonably successful, as they—along with a boom in global commodity prices—have contributed to several years of strong economic growth and considerable reductions in poverty. Beyond economic and social welfare policy, Vázquez has done much to address Uruguay's dictatorship-era human rights violations and expand rights to the country's homosexual population.
Uruguay has enjoyed friendly relations with the United States since its transition back to democracy, though it traditionally has had closer ties to Europe and its South American neighbors, Argentina and Brazil. Commercial ties between Uruguay and the United States have expanded substantially in recent years, with the countries signing a bilateral investment treaty in 2004 and a Trade and Investment Framework Agreement in January 2007. The United States and Uruguay have also cooperated on military matters, with both countries playing significant roles in the United Nations Stabilization Mission in Haiti. Relations are likely to remain close in the coming years as the Obama Administration and President-elect Mujica have announced their mutual desire to further strengthen bilateral ties.
On September 14, 2009, the ATPDEA Expansion and Extension Act of 2009 (S. 1665, Lugar) was introduced in the Senate. Among other provisions, the bill would amend the Andean Trade Promotion and Drug Eradication Act (Title XXXI of the Trade Act of 2002, P.L. 107-210) to provide unilateral trade preferences to Uruguay. Under the bill, certain Uruguayan products, such as wool-based textiles, would be eligible to receive duty-free or reduced tariff treatment until December 31, 2012.
This report examines recent political and economic developments in Uruguay as well as issues in U.S.-Uruguayan relations.