URUGUAY: CHALLENGES TO DEMOCRACY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00768R000100010003-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 27, 2016
• Document Release Date: March 30, 2011
• Sequence Number: 3
• Publication Date: January 1, 1986
• Content Type: REPORT

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Directorate of ~P~~
Uruguay:
Challenges to~ Democracy
ALA 86-10001
January 1986
?py 3 2 7
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a Uruguay:
Challenges to Democracy
This paper was prepared by (Office of
African and Latin American Analysis, with a
contribution by Office of Central
Reference. It was coordinated with the Directorate of
Operations.n
Comments and queries are welcome and may be
directed to the Chief, South America Division, ALA,
Secret
ALA 86-10001
January 1986
~tE~~E,~,~ Directorate of Secret
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Uruguay:
Challenges to Democracy
Key Judgments Julio Sanguinetti, who in March 1985 became Uruguay's first civilian
/,j/ormation available President in 12 years, is facing growing challenges as he attempts to govern
as o1'/4 November 1985 the smallest of South America's fledgling democracies. Although Sanguin-
was used in this report.
etti initially enjoyed the support and cooperation of opposition party
leaders and the military, much of that support is dissipating as economic
problems and attendant pressures mount:
? The deteriorating economy-Uruguay registered 3.5-percent negative
growth in 1985-is, in our view, Sanguinetti's most serious long-term
problem. High inflation and unemployment, coupled with a decline in
exports and a foreign debt burden of $5 billion, have convinced the
President to implement unpopular austerity measures recommended by
the IMF. The recently signed agreement with the Fund enables Uruguay
to reschedule its debt, but its call for belt-tightening also provides
organized labor and leftist parties with a cause to rally opposition to the
government.
? Labor unrest is Sanguinetti's most critical near-term challenge. Labor is
becoming increasingly militant, and violent confrontations with the
government are growing in frequency and scope. Sanguinetti's dialogue
with labor has so far failed to reduce tensions, and recent government ac-
tions indicate that the President has now decided to take tougher steps to
control strikes and labor violence.
? Sanguinetti's relations with the political left have also grown more
confrontational, and in recent months he has countered obstructive
parliamentary maneuvers by the leftist Broad Front coalition and given
the police free rein to control leftist-inspired riots and demonstrations.
We expect increased agitation by the Broad Front and by Communist-
dominated student groups. Another potentially serious development, in
our view, is the reappearance on the political scene of the far-left
Tupamaro guerrilla movement. Although some Tupamaro factions have
pledged to participate in electoral politics, others have stated their
intention to resume violence.
? Another concern of Sanguinetti is the recent increase in Cuban activity
in Uruguay, according to the US Embassy. The Embassy
report that Cuba is cultivating ties to labor and
leftist leaders, including the Tupamaros. Although Cuban involvement to
date has been very low-key so as not to upset recently restored diplomatic
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ties to Uruguay, any signs of growing instability or government inepti-
tude might spur greater Cuban activity.
The military is carefully monitoring the domestic political situation and is
worried by the labor unrest and the resurgence of the left. In our view,
however, the officer corps' greatest concern is that the President might
accede to leftist demands for Argentine-style trials of military personnel
accused of human rights abuses under past military governments.
owever, as emonstrate een awareness of military sensitivities, has
generally consulted with the services before taking action on controversial
issues, and probably is aware of the limits of the military's tolerance. ~
Sanguinetti,
We believe the Sanguinetti government has a slightly better than even
chance of remaining in power over the coming year. The President's more
assertive policies have strengthened his political standing; polls show that
he remains Uruguay's most popular public figure. Although Sanguinetti
will continue to face economic problems, labor unrest, and leftist agitation,
we expect that he will be able to hold civilian opposition to manageable lev-
els. Moreover, the President will in all likelihood retain the support of the
armed forces-primarily by resisting pressure for widespread human rights
We cannot rule out, however, that Sanguinetti will revert to the erratic and
indecisive style of his first months in office, thereby emboldening labor and
the left to intensify antigovernment agitation. If the economy deteriorated
dramatically and the President appeared to lose control of events, factions
of the Tupamaros might return to armed struggle. Under such circum-
stances, hotheads in the military-particularly junior officers of an
ultranationalist and vaguely anti-US bent-could attempt a coup. The
chances of a successful military intervention, in our view, would increase
substantially if Sanguinetti attempted to placate the left by permitting
human rights prosecutions of military officers.~~
A strong, stable, civilian government in Montevideo would clearly buttress the
US goal of promoting democracy throughout the region. A military takeover,
however, could produce a highly volatile regime that, at least initially, might
adopt populist anti-US rhetoric and policies. A coup in Uruguay would
underscore the vulnerability of Latin America's young democracies.)
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Other Rumblings on the Left
4
Political Parties
4
Students
6
The Tupamaros
6
Military Uneasiness
7
Outlook
8
The Military Wild Card
10
Implications for the United States
10
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~s~e
aRin Gard
under jurisdictio
of Argentina)
BUENOS AIRES
Argentina
706600 541399)12-85
Secret
Bounda}y representation is
not neEesserily authoritative.
South
Atlantic
Ocean
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We believe that the chances are roughly 4 in 5 that Sanguinetti will remain in
power through 1986. ~~
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Uruguay:
Challenges to Democracy
Uruguay's peaceful transition from military to civil-
ian rule in March 1985 led many knowledgeable
observers to speculate that the nation had overcome at
least some of its traditional political divisiveness.
Extremists on both the left and the right fared poorly
in the first democratic election in 11 years, and nearly
three-quarters of the electorate backed either the
moderate Colorado or the center-left Blanco Parties.
The minority Colorado government formed by Presi-
dent Julio Sanguinetti tried hard to maintain coopera-
tive relations with key opposition leaders and the
military, and the President sought to use the euphoria
generated by the departure of the generals to govern
consensually.
The honeymoon period, however, has now ended and
Uruguay's disparate political and social forces have
begun to mobilize and pursue their own particular
agendas. Sanguinetti is confronted by a deteriorating
economy, widespread labor agitation, a resurgence of
the radical left, and military unrest. Moreover, polls
show that the Uruguayan populace, while still behind
Sanguinetti, is growing impatient with the country's
political and economic drift and is looking for strong
leadership to supply order and stability. This assess-
ment examines the challenges facing Uruguayan de-
mocracy and the prospects for San uinetti's govern-
ment over the next year.~~
Uruguay has experienced a protracted economic slide
since the 1950s, a trend aggravated over the past
decade by the inflationary spending of successive
military regimes and the disincentives they posed for
investment. President Sanguinetti inherited a stag-
nant economy characterized by a large, inefficient
public sector, antiquated industrial infrastructure,
and an onerous foreign debt. According to the US
Embassy, unemployment reached over 12 percent in
In March 1985, 49 year-old Julio Sanguinetti be-
came Uruguay s first democratically elected presi-
dent uf'ter 11 years of military rule. The armed
.forces, which seized control in 1973 in response to
widespread social unrest and urban guerrilla activity,
handed power back to the civilians through a negoti-
ated settlement known as the Naval Club Accord.
The Accord provided for presidential and congressio-
nal elections in November 1984, lollowed by the
convening of a special Constituent Assembly in 1985.
Under the agreement, the military was granted limit-
ed participation in the civilian government through a
newly created National Security Council, designed to
serve the executive branch in an advisory capacity.
Sanguinetti and his centrist Colorado Party won the
1984 election with 41 percent of the vote. The two
major opposition parties-the center-lcft Blancos and
the leftist Broad Front-won 35 and 21 percent,
respectively. Because seats in the bicameral National,
Congress are apportioned among parties according to
their popular vote totals, the opposition gained con-
trol of both the Senate and the House of Deputies.
In June, Congress voted to postpone the formation of
the Constituent Assembly until after the Accord
expires in February 1986. The US Embassy reports
that civilian political leaders prefer not to convene a
Constituent Assembly, but voted for postponement
rather than cancellation to avoid antagonizing the
military. We believe that constitutional revisions will
eventually be carried out through congressional ini-
tiative. thereby obviating the needlor an Assembly.
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August-considerably higher than Uruguay's average
rate of roughly 9 percent in the previous decade. A
tight monetary policy has brought inflation down
from an annualized rate of 81 percent in July to 42
percent in September, but inflationary biases within
the economy persist since real wages are increasing
while productivity falls. Export earnings-predomi-
nantly from agricultural products-have decreased
considerably since 1984, and prospects for improve-
ment are bleak.~~
Adding to Uruguay's economic woes is a foreign debt
of nearly $5 billion. While small compared to the
debts of its large neighbors, it is a considerable burden
for a country whose annual GDP is only $5.1 billion.
Currently, debt servicing consumes about 40 percent
of Uruguay's meager export revenues. Moreover, the
debt has created political headaches for the new
civilian government. The US Embassy reports that
the left has seized upon the debt issue to discredit
Sanguinetti's moderate policies and to rally support
against the government. Leftist militants have also
succeeded in using the general economic downturn to
gain influence in the labor movement. ~~
economic efficiency.
After an initial period of vacillation, Sanguinetti has
turned to politically controversial belt-tightening mea-
sures to manage the economic crisis, such as freezing
government expenditures and increasing taxes. The
publicly stated goals of the government's economic
program include maintaining inflation at an annual
rate of 45 percent for 1986, decreasing the public-
sector deficit from 9.5 to 5 percent of GDP, and
achieving 2-percent growth next year. This policy
reflects a shift from Uruguay's past reliance on
government spending and easy credit to generate
employment at the expense of price stability and
Sanguinetti has demonstrated his commitment to
austerity by negotiating an agreement with the IMF
that incorporates most of his government's ambitious
economic goals. In return, Uruguay will obtain a
three-year grace period on capital and a 12-year
overall repayment schedule on its debt, and will gain
access to new money from creditor banks. By agreeing
to IMF conditions, however, Sanguinetti has earned
the enmity of the leftists and of labor-who are
publicly demanding a debt moratorium. The recessive
impact of his austerity measures is also depriving the
President of support from some moderate labor and
political sectors, according to Embassy reports. Nev-
ertheless, Sanguinetti appears to be increasingly will-
ing to take short-term political gambles for long-term
economic payoffs.
Although rebuilding the economy is Sanguinetti's
principal long-term challenge, we view labor unrest as
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Table 1
Uruguay: Selected Economic
Indicators, 1982-86
Projected.
b Wages deflated by consumer price index.
the greatest near-term threat to the government.
Since the return to civilian rule, aggressive leftwing
union leaders have quickly returned organized labor
to its accustomed role at the center of the country's
political and economic affairs. Labor strikes and
rallies have often been accompanied by violence, have
severely disrupted both industrial production and the
service sector, and, in our view, have been the main
cause of the tense political and social atmosphere that
besets Uruguay today. According to the US Embassy,
labor leaders called over 200 strikes and organized
223 new unions in the first six months of the Sanguin-
etti administration.
The unions have not merely been agitating for wage
adjustments; their public statements show that they
are attempting to influence all aspects of government
policy and are working for fundamental political
change. In May, for example, the largest labor con-
federation in Uruguay, the leftist Inter-Union Wor-
ker's Plenum-National Convention of Workers (PIT-
CNT), released a 9-point proclamation calling for a
moratorium on foreign debt, wholesale agrarian re-
form, nationalization of the banking system, and
increased social welfare expenditures. These demands
also reflect, in our view, the far left's firm control over
organized labor. In addition, recent union elections
have confirmed the Uruguayan Communist Party
(PCU) as the dominant force within the PIT-CNT,
with other leftist groups playing strong secondary
roles. To date, union members have generally com-
plied with clear-cut leadership decisions, but a recent,
disorganized PIT-CNT congress indicates to us that
union leaders are becoming increasingly disunified,
risking leaving the rank and file without direction.
Sanguinetti, whose Colorados have no union organiza-
tion comparable to the PIT-CNT, has tried to defuse
tensions by luring the unions into "social contract"
talks with the government and opposition parties. The
PIT-CNT responded to this initiative with a wave of
disruptive strikes, culminating in a blatantly political
24-hour general work stoppage in September. We
believe that the public's lukewarm response to the
strike in part spurred labor to re-think its strategy of
constant confrontation. The PIT-CNT now publicly
acknowledges the usefulness of the social contract
talks and has agreed to return to the bargaining table.
The negotiations, however, have so far proceeded in
fits and starts and have not, according to the press,
produced any tangible results other than a slight
diminution in strike activity. ~~
Sanguinetti recently has shown signs of a willingness
to get tough with labor. According to the US Embassy
and press reports, the President, in an effort to
maintain credibility with the left, initially shunned
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direct public criticism of organized labor. When labor
unrest intensified during July and August, however,
the government shifted course and threatened to call a
referendum on legislation to regulate strikes and other
union activities if labor refused to curb its militancy.
The referendum issue became moot, however, when
the unions agreed to return to the negotiation table.
Sanguinetti will expand his fight against labor.
rados are discussing the creation of a Colorado-
controlled confederation of public employees, appar-
ently as a counterweight to the leftist unions.
Sanguinetti is also budgeting more funds for riot
police and will probably renew the threat of punitive
labor legislation if strikes and rallies continue to
disrupt public order and the government's efforts to
reinvigorate the economy.
Although terrorism and the discreditation of the
armed forces are absent, the current scene is highly
evocative of Uruguay in the early 1970s. For example,
the labor unrest that has plagued Sanguinetti since
the early days of his presidency is reminiscent of the
union activism that occured prior to-and helped
precipitate-the military takeover in 1973. Develop-
ments on other fronts are significantly striking to
longtime observers of Uruguay. In the political arena,
numerous leftist politicians who fled into exile at the
time of the military takeover have returned home,
while others have been released from prison. Parties
that were weakened or banned under military rule are
reorganizing and expanding their membership, using
their newfound freedom to attack the government.
Likewise, university campuses have once again be-
come the political hotbeds they were in the 1960s and
early 1970s. The Tupamaros, too, have begun to
reemerge and reorganize. This stirring on all fronts, in
our view, is distracting the Sanguinetti government,
hindering its efforts to grapple with the economic
crisis and address labor discontent, and raising serious
concerns within the military.~~
Poetical Parties
The left is currently exerting its political influence
principally through two opposition groupings, the
leftist Broad Front coalition and the center-left Blan-
co Party. The Broad Front is the most militant force
on the left and, although it was formed only 14 years
ago, is today the third-largest political body in Uru-
guay, according to the US Embassy.
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dozen leftist groups, ranging in ideology from demo-
cratic socialism to Marxist-Leninism. The Front, in
our view, has provided Uruguay's more extreme leftist
groups-including the Communists-with political
respectability and influence that they would be hard
pressed to acquire outside the coalition. The Front's
diverse membership has at times resulted in infighting
and political paralysis, but the US Embassy reports
that it is slowly overcoming these difficulties and is
acquiring considerable popular support, especially
among labor and student groups. Led by former Army
Gen. Liber Seregni, the Broad Front has consistently
been the Sanguinetti government's most vocal oppo-
nent in Congress. It has openly advocated debt repu-
diation and has sought to sabotage the government's
efforts to discipline the labor unions.
committed under military governments.
An example of the Front's aggressively antigovern-
ment stance-as well as its shortsightedness-was its
recent willingness to precipitate a parliamentary crisis
by using a minor case of alleged police brutality to
censure the Interior Minister. The coalition dropped
the censure measure only after Sanguinetti pointed
out that its passage would have constitutionally re-
quired him to dissolve Congress and hold new elec-
tions which, according to polls, would have rebounded
to the Colorados' favor. Nevertheless, the Broad Front
is continuing its congressional agitation, primarily by
attacking the armed forces for human rights abuses
The Broad Front, in our view, will become an even
more formidable adversary if its prime competitor,
the Blanco Party, cannot maintain its leftist aura. In
last year's presidential election, the Blancos-tradi-
tionally acentrist party-cultivated a leftist image
that alienated many longtime Blanco supporters but
suspect that the Broad Front hopes to swell its ranks
with leftists disenchanted with the Blancos' return to
moderation; we note it is mounting a campaign to
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make itself appear as the sole champion of the left.'
with the government, and may eventually spur San-
guinetti to try to limit university autonomy and crack
Students
The university community has historically been the
sector of Uruguayan society most receptive to leftist
ideology. Press reports indicate that the left easily
reasserted its control of the campuses in the months
following the return to democracy. According to,the
US Embassy the
largest student organization at the important Nation-
al University is once again dominated by militant
leftists. The composition of leftist leadership, however,
is changing. The US Embassy identifies several Broad
Front factions and the Blancos as the parties with the
greatest support among students, edging out the Com-
munist Party, which in previous years had the undis-
puted backing of campus leftist leaders.
Although the Communists suffered a setback in stu-
dent elections in June, winning only 17 percent of the
vote and finishing third behind the Broad Front and
the Blanco Party, we concur with the US Embassy's
view that the extreme left remains a force to be
reckoned with in university politics. Just as the Colo-
rados and other moderate forces have failed to build a
centrist union to counter the PIT-CNT, so, too, have
they been unable to effectively oppose the hardcore
down on political activities on campus.
The Tupamaros
Since March 1985, when the new civilian government
restored freedom of association, the National Libera-
tion Movement-known as the Tupamaros-has been
actively reorganizing, accordin to the US Embassy
In the 1960s and
early 1970s, the Tupamaros were one of South Ameri-
ca's most active and publicized far-left urban guerril-
la groups. The perceived threat of a Tupamaro take-
over helped provoke the military to overthrow the
civilian government in 1973. After the coup, nearly all
Tupamaro guerrillas were imprisoned or exiled. With
the return to democracy, Tupamaro political prisoners
profited from a general amnesty, and the group's
exiles were allowed to return home. The movement,
however, which was once fairly cohesive and disci-
plined, has now splintered into several factions.
Despite his violent past, Raul Sendic, leader of the
largest Tupamaro grouping, has publicly pledged that
his faction will work within the framework of elector-
al politics. We suspect that Sendic's rejection of
violence is a tactical maneuver and not a sincere
commitment to the democratic r
Students have organized demonstrations
against repayment of the foreign debt and in opposi-
tion to US policy in Central America, as well as
numerous strikes in solidarity with labor. In addition,
leftist university groups were well represented at the
Moscow Youth Conference held last August, accord-
ing to the US Embassy. We believe that increasing
student militancy will assure continued confrontation
' Despite its newly moderate stance, the Blanco Party remains a
vehicle for the left. Ferreira's son, Juan Raul, leads an extreme
leftist Blanco faction known as the "Popular Nationalist Faction."
In
t e un i e y event that Juan Raul Ferreira were to succeed his
father, who is 68, as party president, we believe that his faction
Polls indicate that the vast majority of Uru-
guayan society now repudiates violence, and 26th of
March leaders have almost certainly concluded that a
return to armed struggle would not win the sizable
popular support the Tupamaros enjoyed prior to 1973.
Moreover, Sendic com-
mands the loyalty of no more than a few hundred
followers, and his group appears to lack the weapons
and other resources necessary to wage effective urban
guerrilla warfare.
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At least one Tupamaro faction believes that Sendic is
being too cautious, and favors a prompt return to
violence. this
group-the Six Points Movement-is loosely con-
trolled by the Communist Party and has ties to Cuba.
mate political parties
groups-such as the Broad Front-offer better oppor-
tunities to gain influence in Uruguay, and therefore
has avoided committing itself exclusively to the guer-
rillas. For similar reasons, we believe the Soviet Union
has avoided association with the Tupamaros, concen-
trating instead on strengthening ties to more legiti-
We doubt that the Six Points faction will be able to
effect significant terrorism in the near term; individ-
ual militants or supporters of other Tupamaro fac-
tions could commit isolated terrorist acts at any time.
Such small-scale violence would not, in our view,
directly threaten the Sanguinetti government at this
juncture. If, however, Sanguinetti presides over a
sharp intensification of Uruguay's social and econom-
ic problems, popular support for "revolutionary
change" could increase and one or more Tupamaro
factions might revert to full-blown armed struggle,
prompting a direct confrontation with the military.
political situation.
The military, which until now has generally supported
Sanguinetti, is beginning to show displeasure with the
e m assy reports
that the military is especially worried by increasingly
vocal leftist demands for Argentine-style trials of
officers for alleged human rights abuses committed
under the military government.
Civilian and military courts are now embroiled in a
public battle over jurisdiction to hear human rights
cases against officers, and the Supreme Court has
been charged to rule on the issue. Civilian courts have
issued arrest warrants for three officers accused of
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lthough Cuba
has longstanding ties to the Tupamaros, there is no
evidence that Cuba has offered them substantial aid.
In our view, Havana probably believes other .leftist
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the indicted officers have publicly asserted
that under no circumstances will they subject them-
selves to civilian trials, and military unit commanders
have agreed to block any attempt to take the accused
into custody.
Sanguinetti, in
our view, hopes to isolate the Broad Front-which is
the most insistent supporter of military trials-and
force the issue onto the back burner. The President
probably calculates that he can withstand radical-
leftist pressure for widespread prosecutions.
US Embassy reporting indicates
that many party leaders support Sanguinetti's efforts
to assuage military concerns.
The officer corps is also worried about recent Broad
We believe that military budget
cuts imposed by the civilian government are sharpen-
ing these fears; the three services face budget reduc-
tions of 20 to 30 percent. The US Embassy reports
that the military believes that these cuts will reduce
its capacity to counter violent labor unrest and poten-
tial guerrilla violence.
Notwithstanding his attempts to calm military anxi-
eties, Sanguinetti, in our view, has fueled the fire by
retiring Gen. Alfonso Feola, an active-duty officer
who broke a tacit pledge by the military not to make
public political statements. The general had published
an open letter countering leftist charges of excessive
military salaries in which he demonstrated that a
cabinet minister earned much more than a flag rank
officer. By firing the general-a move backed by
General Medina and key civilian political leaders-
Sanguinetti probably hoped to demonstrate his deter-
mination to keep the military out of politics. The US
Embassy reports, however, that the move has further
eroded Medina's support within the officer corps and
angered key ranking officers.
Senior and junior officers are split over how to
respond to the present political situation,
Most general offi-
cers, while concerned about the dangers of human
rights trials, still back the civilian government, but
they caution that they are losing the support of
increasingly discontented junior and midlevel officers.
The press reports that these officers-many of whom
were directly involved in the abuses of the past-feel
directly threatened by the prospect of Argentine-style
trials. Many were unenthusiastic about returning
power to the civilians and, in our view, are searching
for a pretext to regain political influence.
many field-grade offi-
cers blame the United States for allegedly pressing
the military to give up power.
We believe that the chances are roughly 4 in 5 that
Sanguinetti will remain in power through 1986. Dur-
ing his first months in office the President attempted
to balance the competing interests of labor, the left,
and the military by acceeding to the demands of these
groups whenever possible. By resisting definitive ac-
tion on controversial issues such as economic reform,
however, the government, in our view, projected an
image of weakness that gave Uruguay's well-
organized political and social forces a green light to
pursue their own parochial agendas, regardless of the
cost to political stability and economic recovery. We
believe the President now recognizes he must govern
more assertively and risk alienating some sectors of
Uruguayan society in order to strengthen institutions
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and tackle the country's deeply rooted problems. Our
relative optimism regarding Uruguay's near-term
prospects is in part based on Sanguinetti's newfound
ability to make hard decisions-evidenced by his
firming stance against labor unrest; acceptance of
austerity measures proposed by the IMF; and willing-
ness to call the left's bluff, as reflected by his threat to
dissolve Congress to counter agitation by the Broad
Front.
Another factor that is boosting the President's pros-
pects, in our view, is the Uruguayan public's growing
disenchantment with political drift and social and
economic disorder. Polls show that a majority of
Uruguayans are tired of the endless strikes, marches,
and rallies that have disrupted the country since the
return to democracy, and are eager for a strong
government that will take decisive measures to en-
force order. Sanguinetti's standing in the polls has
increased in recent months as his government has
begun flexing its muscles, and we believe the Presi-
dent can expand and consolidate his popular support
too weak and divided to launch a dramatic comeback.
Nevertheless, we expect to see constant sparring
between militant students and aggressive Broad Front
politicians on the one side, and a President less and
less disposed to conciliation on the other. ~~
In our view, Sanguinetti can count on the support of a
relatively united Colorado Party and a large segment
of the population in this struggle. Moreover, should
leftist agitation threaten to undermine civilian rule,
we believe that he could also enlist the backing of
Wilson Ferreira and the Blanco Party. The Blancos
disagree with many Colorado policies and are not
likely to rubberstamp Sanguinetti's legislative initia-
tives, but Ferreira's desire, according to the US
Embassy, to become president when Sanguinetti steps
down in 1989 gives his party a stake in the mainte-
by persisting with more aggressive policies.
Sanguinetti's most pressing task will be to try to turn
around the economy. Even if the government complies
with IMF guidelines, however, we expect, at best,
continued economic stagnation. Although the tight
money policies and large budget cuts recommended
by the Fund may help put Uruguay on a surer long-
term economic footing, they will almost certainly
frustrate the government's goal of 2-percent growth
for next year. External factors-such as improved
world prices for Uruguay's agricultural exports-are
also, in our view, unlikely to come to Sanguinetti's
aid. Under the circumstances, just maintaining cur-
rent levels of production would be a substantial
achievement. Labor will almost certainly continue to
contribute to the country's economic woes through
frequent strikes. We believe, however, that Sanguinet-
ti's determination to restrict disruptive union activity
will prevent organized labor from mounting a success-
ful campaign to destabilize the government.~~
The left, in our view, will continue to exploit labor
unrest and the country's general political ferment for
partisan ends. We doubt that the political debate will
turn violent-the Tupamaros probably will remain
Despite the probable overall increase in political and
social unrest, we judge that a military coup is unlikely
during 1986. We expect continued cooperation be-
tween Sanguinetti and moderate Blanco politicians to
try to control provocative leftist behavior and deprive
the armed forces of any pretext to seize power. In
particular, we believe that the President is aware of
the military's visceral opposition to civilian trials of
officers accused of human rights violations and will
probably find a way to limit such court actions to a
few cases of egregious abuses. Moreover, Sanguinetti
probably will benefit from strong public support for
democracy and the military's political isolation and
poor reputation with most Uruguayans-factors that,
in our view, will make the generals think twice before
mounting a coup. The military, however, will almost
certainly retain a role in domestic politics, exerting
behind-the-scenes pressure on the President to crack
down on the left and control subversion. Sanguinetti
may turn to the military to supplement the police for
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riot control, strike breaking, or counterterrorist activi-
ties, as presidents from his party have done in the
past.
The Military Wild Card
There is an outside chance, however, that the military
will become a more direct actor in Uruguayan poli-
tics. We estimate'the odds for a military coup to be
about 1 in 5 over the next year.
The greatest danger, in our view,
would be reversions to the policies of conciliation and
appeasement of the left that characterized Sanguinet-
ti's first months in office. Such slackening of the
President's resolve to control the leftist militants
would almost certainly lead to increased strike activi-
ty and growing Broad Front antimilitary agitation in
Congress and in the streets. If the government ap-
peared increasingly ineffective, some Tupamaro fac-
tions might return to armed struggle. These develop-
ments would severely strain civilian-military relations
and might lead to isolated terrorist acts by disgruntled
officers or abortive garrison uprisings. We believe that
the chances for a successful coup by ultranationalist
field-grade offlcers~r by their superiors in an effort
to preempt such amove-would rise rapidly if the
Sanguinetti administration, in any effort to placate
the left, countenanced widespread civilian trials of
mil;tary officers for alleged human rights abuses.
President Sanguinetti has repeatedly stressed his de-
sire to maintain friendly, cooperative ties with Wash-
ington and other Western democracies, and he is
clearly aware that the United States believes its
interests are best served by a strong, stable civilian
government in Montevideo. Uruguay's continued suc-
cess in navigating between military rule and leftist-
inspired revolution will buttress the overall US goal of
promoting democracy throughout the region. Compli-
cations in relations between the United States and
Uruguay at present are limited to the occasional trade
dispute.~~
Despite the left's activism, we see little chance that
revolutionary sentiment will spread or that leftist
influence will weigh heavily on policies affecting the
United States. A direct and serious threat to Wash-
ington's interests over the next year could emerge,
however, in the unlikely event that the Tupamaros
decide to return to violence and target the US pres-
ence in Uruguay. Soviet and Cuban activity in Uru-
guay poses another, but as yet minor, threat to the US
interests there. While the influence of Havana and
Moscow is small at present, their views are finding
fertile ground among leftist groups and could aid in
escalating leftist opposition in the future.
A less direct threat to US interests in the coming year
would stem from the overthrow of Sanguinetti by
rightwing officers disgusted by growing leftist influ-
ence. The ensuing ultranationalist military regime
presumably would be highly unpredictable and could
initially adopt populist, anti-US rhetoric and policies.
In the long run, however, we suspect that a new
military government's nationalist bluster would sub-
side and Montevideo would look to Washington as an
ally. This would be a mixed blessing; it could lead to a
warmer relationship, but would also fuel leftist suspi-
cions that the United States had sponsored the coup
and, eventually, complicate US relations with any
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Foreign Policy Under Sanguinetti
Since the return to civilian rule, Uruguay has sought
to expand its international ties. In addition to main-
taining Uruguay's traditionally close and friendly
relations with the United States and Western Europe,
President Sanguinetti is paying greater attention to
improving regional relations particularly with Ar-
gentina and Brazil-while making cautious overtures
to Soviet Bloc countries to promote trade.~~
proposalsfor debt repudiation. Uruguay has also
become a member of the Contadora Support Group-
a position that allows it a minor political role in
promoting peace in Central America.
Despite the existence of diplomatic ties to the USSR,
contacts with that country remain limited to econom-
ic and trade issues.
The most importantforeign policy action undertaken
by the new civilian government was the renewal of ties
to Cuba after a 21 year hiatus.
In our view, he probably calculated
that recognizing Havana was a simple way to earn
political credit with the left.
Uruguay, however, continues to reject Cuban views on
international issues. In response to the debt crisis, for
example, Uruguay chose to help create the Cartagena
Group as a more reasonable alternative to Cuban
civilian successor regime. Finally, any coup in Uru-
guay would point up the vulnerability of Latin Ameri-
ca's young democracies. Neighboring armed forces-
especially in Argentina-would closely watch US and
other creditor nations' attitudes toward a Uruguayan
military regime.
Sanguinetti will
probably accept some trade offers, but is not likely to
welcome closer political ties to the Soviets.
Even with the broadening of Uruguay's international
ties, we expect the United States to remain the most
important actor in Uruguayan foreign policy formula-
tion. Bilateral trade disputes will periodically cause
riction in US-Uruguayan relations, but we believe
that Uruguay is likely to retain its longstanding role
as a US ally. ~~
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