VZCZCXYZ0010
RR RUEHWEB

DE RUEHMN #0714/01 3431204
ZNR UUUUU ZZH
R 091203Z DEC 09
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC 0072
INFO MERCOSUR COLLECTIVE

UNCLAS MONTEVIDEO 000714 
 
SENSITIVE 
SIPDIS 
FOR A/S VALENZUELA FROM CHARGE ROBIN MATTHEWMAN 
WHA/BSC FOR MILT DRUCKER, BRUCE FRIEDMAN, AND MARY DASCHBACH 
 
E.O. 12958: N/A 
TAGS: PREL PGOV EAGR ECON SNAR UY
SUBJECT: Scenesetter for Assistant Secretary Valenzuela's December 
16-17 trip to Uruguay 
 
Summary 
 
------------ 
 
 
 
¶1. ( SBU) Embassy Montevideo warmly welcomes your December 16-17 
visit.   You will be the highest-ranking U.S. official to visit 
Uruguay during the Obama Administration.  Arriving shortly after 
Uruguay's Presidential elections, your visit will allow us to 
recognize the excellent collaboration we have nurtured with the 
outgoing Vazquez administration and to begin building a strong 
relationship with former guerrilla turned president-elect Jose 
"Pepe" Mujica and his team.  Your visit will serve as an 
affirmation of the important role Uruguay plays in promoting 
regional stability, democracy, conflict resolution and peacekeeping 
missions worldwide.  End Summary. 
 
 
 
President Vazquez's Legacy 
 
------------------------------------ 
 
 
 
¶2. (SBU) Vazquez is the first Frente Amplio coalition president in 
Uruguayan history.  He has had an extremely successful presidency, 
with an average 60% approval rating that is still seeing upticks in 
his last months in office.  Under Vazquez, the Frente demonstrated 
that it could successfully combine its concern for social justice 
with economic growth. 
 
 
 
¶3.  (U) Coming into the presidency on the heels of Uruguay's grave 
economic crisis of  2002, the GOU (and in particular longtime 
Minister of Economy and now Vice President-Elect Danilo Astori) 
made prudent use of the subsequent recovery and the rise of 
commodity prices to deliver five years of positive economic growth. 
Vazquez's economic team also kept inflation steady and unemployment 
fairly low, successfully diversified Uruguay's trade relationships 
away from dependency on Argentina and Brazil, and strengthened its 
banking system.   The GOU maintains a positive investment climate, 
keeping corruption low, providing juridical security, and 
completing vitally important infrastructure projects such as a 
world class container port, a new airport and improved roads.  Tax 
incentives have also played a part.   The result has been rapidly 
increasing foreign investment, and economic growth barely touched 
by the world financial crisis.  The Central bank has a good cushion 
of international reserves and the GOU has proactively secured 
credit lines from the World Bank, IDB and other IFIs. 
 
 
 
 
¶4.  (U) The Frente Amplio government strengthened Uruguay's 
traditionally strong labor rights considerably.  During Vazquez' 
administration, 36 labor rights laws were passed, including a law 
to promote greater employee participation in business; collective 
bargaining in the public sector and expanded retirement options. 
Poverty declined, which the Frente credits to its social policies, 
including the GOU's program of assistance to low-income families. 
That was funded, in part, by the implementation of a new income tax 
on middle to high income individuals.  A practicing oncologist, 
Vazquez has taken special interest in public health.  He banned all 
indoor public smoking, extended health care to many low income 
families through a payroll tax and invested in state of the art 
medical facilities.  Under Vazquez's leadership, Uruguay became the 
first country in the world to make the one-laptop-per-child idea a 
reality.  Over 400,000 elementary school children across Uruguay 
work daily on their laptops, using free internet at the schools and 
in many public places.  Finally, the GOU has sought ways to prod 
science and technology cooperation, for example bringing the 
Pasteur Institute to Uruguay and setting up organizations to foster 
innovation and research. 
 
 
 
¶5. (SBU) The Vazquez administration, in close coordination with the 
DEA, also made significant strides in the areas of counternarcotics 
and money laundering.  The focus has led to several high profile 
cocaine seizures, including two planes in 2008 and a record seizure 
of over two tons on a yacht in 2009.  The GOU has launched 
specialized courts for organized crime, allowing the judicial 
 
 
system to confront the growing problem of organized crime, 
including money laundering and trafficking in persons.  The prison 
system remains overcrowded and underfunded, but after a 2009 visit 
from the UN Special Rapporteur for Torture and other Cruel, Inhuman 
or Degrading Treatment or Punishment, the administration moved 
quickly to double the funding available to construct and remodel 
prisons.  By Latin American standards, Uruguay is relatively safe 
and secure, but crime is growing and personal security is a major 
concern.  Many believe that the growing use of "pasta base," a form 
of crack, is fueling the increase in crime. 
 
 
 
Increasingly a Partner on Regional and Multilateral Issues 
 
--------------------------------------------- ---------------------- 
-------- 
 
 
 
¶6. (SBU)  We have developed an increasingly collaborative and 
constructive relationship with the initially skeptical Vazquez 
administration.  Especially in the last two years, Uruguay has been 
an important voice for strong democratic institutions, prudent 
economic policies, and the peaceful resolution of conflicts.  The 
GOU was helpful in the OAS General Assembly deliberations on Cuba, 
helping us achieve the final compromise.  Uruguay helped behind the 
scenes to calm tensions between Colombia and Ecuador, worked with 
Chile to calm the waters in Bolivia, argued for Colombia's 
sovereign right to sign the U.S.-Colombia Defense Cooperation 
Agreement, and was a constructive voice for the return to the 
constitutional order in Honduras, arguing against outside 
interference and supporting President Arias' peace process.  As a 
member of the International Atomic Energy Agency's Board of 
Governors, Uruguay supported important resolutions on Iran and in 
the selection of a new director general.   Within the UN Human 
Rights Council, the GOU voted for the USG candidate to the Council, 
and was helpful on anti-Israeli resolutions, the Goldstone Report 
controversy, and on various single country resolutions of interest 
to the U.S. 
 
 
 
¶7. (SBU)  The USG's warm reception of President Vazquez during his 
September visit to Washington and New York was well received by the 
GOU.  He and his delegation were impressed by and grateful for the 
meeting with Secretary Clinton and her handling of the press 
conference afterwards, as well as Vazquez' inclusion in President 
Obama's meeting with leading peacekeeping mission countries, and 
they are still thanking us for it.  This was one more example of 
the fact that small gestures can go a long with Uruguay. 
 
 
 
The Outstanding Trade Issues 
 
-------------------------------------- 
 
 
 
¶8. (SBU) Conversations with Mujica and Foreign Minister Vaz will 
likely come around to the issue of access to the U.S. market for 
Uruguayan lamb and citrus.  Vazquez placed a very high priority on 
advancing these SPS issues with the U.S., and raised them again 
with the Secretary in September.  Indications are that they will be 
important to Mujica as well.   In parallel, we have been pushing 
for more access to the Uruguayan market for U.S. beef, live cattle 
and chicken.   USDA has advanced significantly on a draft rule to 
lift SPS restrictions on boneless lamb and the GOU has made great 
strides on its risk assessment of U.S. beef. 
 
 
 
¶9. (SBU)  Your interlocutors will likely also be interested in the 
USG's current policy on trade, and will seek your support for 
Senator Lugar's proposal to extend the Andean trade preference 
program to Uruguay.  Mujica is on record opposing the negotiation 
of an FTA with the U.S. but supportive of our robust Trade and 
Investment Framework agreement (TIFA).  It will be useful for you 
to explain that the USG is not embarking on new trade agreements at 
this time.  We welcome Uruguay's continued support for a successful 
outcome to the Doha talks, and will continue to seek to remove 
barriers to trade and investment through the TIFA process. 
 
 
Historic Elections 
 
 ---------------------- 
 
 
 
¶10. (SBU)  Mujica's historic transformation -- from a Tupamaro 
guerrilla, who spent a brutal 15 years in prison, to leadership of 
the country -- was considered highly unlikely by most observers of 
Uruguayan politics only two years ago.  However, aided by President 
Tabare Vazquez's achievements and a strong communicator's ability 
to connect with the electorate, Mujica and his Frente Amplio (FA) 
coalition won big in the elections this fall.  The Frente secured 
absolute majorities in both houses of parliament in the October 25 
general elections, and Mujica then soundly beat National Party 
challenger Luis Alberto Lacalle by ten points (53-43) in a November 
29 runoff election.   Lacalle's poor showing disappointed National 
Party supporters, and will lead to some soul searching.  In 
contrast, charismatic third-place candidate Pedro Bordaberry is 
well positioned to renew and rebuild the previously failing 
Colorado Party and will be a formidable opponent in the next 
elections. 
 
 
 
Mujica: Social Justice Focus, Foreign Policy Neophyte 
 
--------------------------------------------- ---------------------- 
-- 
 
 
 
¶11.  (SBU) As president, Mujica is expected to focus on the 
domestic policy concerns that have been his lifelong passions - 
poverty reduction, housing, education, crime, and the restructuring 
of the state.  He moving quickly to put together a Cabinet that he 
hopes will consolidate the gains achieved "under the first Frente 
Amplio government" and which satisfies his complex coalition's 
desire for political balance among the various constituent 
factions.  He understands the importance of continuing Vazquez's 
prudent macroeconomic policies and generating additional growth, 
and will rely on Vice President Astori to oversee the economic 
ministries. 
 
 
 
¶12. (SBU) Mujica's foreign policy will be a work in process, as he 
becomes more familiar with the key issues and builds his foreign 
policy team.  He tapped a career diplomat, Luis Almagro, to be his 
foreign minister (currently Uruguay's ambassador to China), and 
congressman Luis Angel Rosadilla as his Defense Minister.  He will 
likely focus at first on relations with his neighbors, mending the 
relationship with Argentina, shoring up ties with Brazil, and 
exploring ways to foster additional regional integration.  He 
participated actively with his Argentine, Brazilian, Paraguayan, 
and Venezuelan counterparts during the December 7-8 Mercosur summit 
in Montevideo.  Many expect the Mujica government to continue to 
support Uruguay's peacekeeping work.   Mujica will seek a 
constructive relationship with the United States.  It will likely 
take some time to reach the high level of cooperation that we 
currently enjoy on regional and multinational issues. 
 
 
 
Bilateral Assistance 
 
------------------------- 
 
 
 
¶13. (U) The USG provides modest levels of bilateral assistance to 
Uruguay, in part because the relatively high level of per capita 
income (currently around $9,000).  Many Uruguayans remember and 
greatly appreciate the U.S. assistance provided during the 
financial crisis of 1999 to 2002, including a vital $1.5 billion 
bridge loan and increased public and private donations to 
hospitals, schools, and humanitarian organizations, but that 
short-term assistance has mostly ceased. 
 
 
 
¶14. (U) The U.S. Southern Command's Humanitarian Assistance Program 
(HAP) and Global Peace Operations Initiative (GPOI) programs 
provide a significant portion of funds available to the U.S. 
 
 
embassy for engagement.  In 2009, construction and donations 
amounted to approx $1.4 million.  Donations in 2009 included 
equipment for emergency operation centers, firefighting equipment, 
dental clinic supplies, equine therapy programs, and supplies for 
schools, orphanages and old age homes.  IMET/CD funds of 
approximately $650,000 annually provide the primary source of 
training and education. 
 
 
 
¶15.  (U) The Inter-American Foundation provides small but effective 
development grants to NGOs and community groups.  In 2008 the IAF 
funded three proposals at a total of USD 279,000.  The USG has 
ongoing technical assistance programs in place run by Treasury and 
the FAA, and receives small amounts of counternarcotics funds from 
INL, as well as support from DEA.  We sponsor active scientific 
exchanges and joint research in areas such as Antarctic research, 
health, agriculture, and alternative energy. 
 
 
 
Public Diplomacy and Outreach 
 
----------------------------------------- 
 
 
 
¶16.  (U) Mutual understanding is Embassy Montevideo's number one 
goal, and we have successfully raised the U.S. approval rating here 
substantially, to a high 70% after President Obama's election.  We 
credit much of this to our dedicated outreach towards a variety of 
audiences, as well the placement each year of around 1000 good news 
stories in the local media.  Our international visitor program 
continues to attract outstanding Uruguayan candidates, including 
Jorge Vazquez (the brother of the President) and his two senior 
aides for drug control and money laundering.  We have an exchange 
programs in place that involve animation software students and 
professors, and we also created exchange programs involving law 
students, professors, and judges from schools in Montevideo and the 
¶U. of Florida School of Law in Gainesville. 
 
¶17. (U) English teaching is a priority here. We gave the local 
school system funds to teach English to grade one through grade 
three students in 56 schools.  Uruguayan authorities are taking up 
the funding and will expand the program to enable students from the 
1st to the 6th grades to learn our language, over a phase-in period 
lasting about three years.  The Embassy was one of the first three 
U.S. Missions to have its own FaceBook page. We now have over 3700 
"FaceBook fans."  Finally, successful lobbying from the Embassy 
induced the Uruguayan government to end its six-year moratorium on 
funding the local Fulbright Commission by giving the organization 
$150,000 in 2009. 
 
Comment 
 
------------- 
 
 
 
¶18. (SBU)  Our policy of engagement with Uruguay in areas of mutual 
interest has succeeded quietly but effectively over the last five 
years, and we have an excellent opportunity to build on this strong 
foundation.  As there were with the Vazquez administration, there 
will be voices pushing the next Uruguayan government toward a 
populist and more ideological stance, but pragmatism will likely 
rein them in.  There is a natural fit between President-elect 
Mujica's priorities and our initiatives within Pathways, the Energy 
and Climate Change Partnership, and the Interamerican Social 
Protection Network.  Your visit will help us underscore our message 
that the USG is a good partner and sincerely cares about economic 
and social justice in Latin America.  Your visit will also 
demonstrate that the USG understands the important role that 
Uruguay plays, both in the region and beyond. 
MATTHEWMAN