Talking left abroad

Uruguay's new president

Mar 3rd 2005 SÃO PAULO
From The Economist print edition

Walking to the centre at home

TABARÉ VÁZQUEZ, Uruguay's new left-wing president, is already an historic figure. His inauguration on March 1st ended more than 150 years of government by two of the world's oldest political parties, the Colorados and the National Party. He also looks like a fortunate one. Uruguay's economy grew 12% last year, and continues to recover from a slump. For the first time in 40 years the president's party enjoys a majority in both houses of Congress. The omens could hardly be better.

Whether or not they are borne out will depend largely on the success of Dr Vázquez, an oncologist and former mayor of Montevideo, in controlling the more radical elements of his coalition. A member of Latin America's growing fraternity of left-leaning presidents, he is likely to try to imitate Brazil's pragmatic Luiz Inácio Lula da Silva rather than Venezuela's populist Hugo Chávez. The new economy minister, Danilo Astori, is a moderate who backs a prudent fiscal policy and encourages private investment. He wants a new loan agreement with the IMF.

Plenty of people in Dr Vázquez's Frente Amplio (Broad Front) think differently, but he has dealt with them cleverly. José Mujica, a popular former guerrilla, is the new agriculture minister, a job with little influence over economic policy. Reynaldo Gargano, an unreconstructed socialist, will run foreign affairs. Mr Astori has stoutly resisted pressure to add leftists to his economic team and the new president has backed him.

Mr Astori still has battles to fight, especially with labour unions. The first will be over a budget for the next five years, due to be concluded in August. Public-sector workers, whose salaries were squeezed by the slump, will press for big wage rises. The government cannot afford these: Uruguay's public debt is about 90% of GDP. Instead, Dr Vázquez will offer a $100m two-year emergency programme to help people hardest hit by the slump triggered by the collapse of neighbouring Argentina.

The biggest difference may come in foreign policy. The outgoing government of Jorge Batlle was pro-American. Dr Vázquez restored diplomatic relations with Cuba, broken in 2002, on the first day of his presidency. Under Mr Batlle, Uruguay was a wayward member of Mercosur, a four-nation customs union dominated by Brazil and Argentina. He negotiated a separate investment treaty with the United States, which Congress has yet to ratify. Dr Vázquez plans to embrace Mercosur, but without alienating the United States. It will take many such feats of balance to keep his lucky streak going.

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