Uruguay Hit by Economic Crisis

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Uruguay, formerly known as the Switzerland of Latin America, seems to be plunging into a deep social and political crisis parallel to that of its larger neighbor Argentina. On Aug. 25, Uruguayan independence day, according to the Mexico City daily La Jornada, 100,000 marched in Montevideo to protest the government’s economic austerity policy and capitulation to the demands of imperialist finance.

The action was called by the Uruguayan union federation, the PIT/ CNT, along with an organization representing small and medium businesses. A union representative, Jose Suarez, told the crowd that since the government decided to allow the local currency to float on June 20, workers had lost 25 to 30 percent of their purchasing power. The currency has lost 50 percent of its value. But despite the cheaper exchange rate, since the beginning of the year, exports have fallen by 40 percent.

On July 30, the government declared a bank holiday to try to stop the drain on the banking reserves. Since January, according to a report in the Aug. 7 issue of Le Monde, the country’s currency reserves have shrunk by 80 percent, and bank deposits by 45 percent. According to the PIT/CNT, the jobless now number 250,000 in a country whose total population is only 3.3 million, and 50 percent of new babies are born into families living below the poverty level.

The slide into economic disaster provoked a general strike on Aug. 7 that totally closed down the banks, the government offices, and education. In its Aug. 13 issue, La Jornada reported that students at the national university had started an unlimited strike against the government’s neoliberal policy and its acceptance of the IMF demand for slashing public spending and liquidating public services.

The eruption of economic crises in Uruguay and Brazil has forced the United States to offer some loans, despite its announcement that it would do nothing to bail out the Argentine economy. In the case of Uruguay, the U.S. loan amounted to $1.5 billion. But the loan was not sufficient nor intended to solve Uruguay’s economic difficulties. It was designed only to facilitate the mechanism of austerity, to prevent an uncontrolled collapse of the banking system.

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