VZCZCXYZ0001
RR RUEHWEB

DE RUEHMN #0132/01 0531537
ZNR UUUUU ZZH
R 221536Z FEB 10
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC 0269
INFO MERCOSUR COLLECTIVE
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS MONTEVIDEO 000132 
 
SIPDIS 
FOR SECRETARY CLINTON FROM AMBASSADOR NELSON 
WHA FOR A/S VALENZUELA, DAS MCMULLEN, AND DRUCKER 
NSC FOR RESTREPO 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ETRD UY
SUBJECT: Scenesetter for the Secretary's March 1 Trip to Uruguay 
 
Summary 
 
------------ 
 
 
 
¶1. ( SBU) Embassy Montevideo warmly welcomes your March 1 visit to 
attend  the inauguration of Jose "Pepe" Mujica,  a former Tupamaro 
guerrilla with a remarkable life trajectory.  Mujica's ascension to 
power at the age of 74 can be seen as a  success story of national 
reconciliation and  the maturing of Uruguayan democracy.  Observers 
credit Mujica's solid victory in Uruguay's November run-off 
elections both to his compelling, albeit polarizing, personal story 
and the Uruguayan population's satisfaction with the results of his 
Frente Amplio coalitions's successful performance under the 
leadership of incumbent President Tabare Vazquez.  We expect Mujica 
to continue Uruguay's prudent macroeconomic policies and a centrist 
foreign policy, despite occasional leftist rhetoric.   Given his 
past there are some public questions about the future of our 
relationship.  However, he has indicated that he understands the 
importance of the United States to Uruguay, and at this point we 
anticipate being able to work productively with him to keep the 
bilateral relationship strong.   Your visit will be a welcome 
affirmation that we appreciate and seek to maintain the cooperative 
relationship, recognizing the important role Uruguay plays in 
promoting regional stability, democracy, conflict resolution and 
peacekeeping missions worldwide.   End Summary. 
 
 
 
Uruguay at a Glance 
 
------------------------ 
 
 
 
¶2. (U) Positioned (sometimes uncomfortably) between regional giants 
Brazil and Argentina, Uruguay is a stable, democratic nation of 3.3 
million people, almost half of them residing in its capital, 
Montevideo.  Uruguay is one of Latin America's wealthiest and most 
egalitarian countries, with an economy characterized by a reliance 
on tourism and an export-oriented agricultural sector, a 
well-educated work force, and high levels of social spending. 
 
 
 
¶3. (SBU) The current government, led by outgoing president Tabare 
Vazquez, was the first in Uruguay's long democratic history to be 
formed by the Frente Amplio (Broad Front) coalition, an 
amalgamation of groups from the left side of Uruguay's political 
spectrum.  Uruguay has some of the oldest active political parties 
in the world (its two "traditional" parties began operating around 
1830), so the Frente Amplio's ascension to power in 2005 raised 
questions in many minds about how well Uruguay would function under 
new leadership.  Those questions are asked no longer:  Vazquez has 
had an extremely successful presidency, and he is leaving office 
with a historically unprecedented public approval rating of around 
75 percent.  Coming to power on the heels of the country's 2002 
economic collapse, Vazquez and his team made prudent use of the 
subsequent recovery and the rise of commodity prices to deliver 
five years of economic growth, poverty reduction, and strengthened 
labor rights, thereby demonstrating that the Frente could 
successfully combine its long-stated concern for social justice 
with sound economic management. 
 
 
 
¶4. (U) The Vazquez administration's highest profile domestic 
success story has been 'Plan Ceibal,' Uruguay's version of the 
one-laptop-per-child program.  Uruguay is the first country in the 
world to have achieved the goal of providing every primary school 
child a laptop computer;  over 400,000 elementary school children 
across Uruguay are now working daily on their laptops, and using 
free internet at the schools and in many public places.  Solid 
economic growth and focused social spending have also significantly 
reduced the number of people in extreme poverty. 
 
 
 
Uruguay's Resilient Economy 
 
----------------------------------- 
 
¶5. (U) The global crisis was felt later and more mildly in Uruguay 
than in most other countries.  Lessons learned from the regional 
economic crisis in 2002, including prudent macroeconomic policies, 
improved banking supervision and risk assessment policies, 
diversification of trade and investment put Uruguay in an excellent 
position to survive the global downturn.  The Ministry of Economy 
estimates that Uruguay grew 1.2 percent in 2009, and, perhaps 
optimistically, predicts 3.5 percent growth for 2010.  Inflation is 
now historically low, in the 6-7% range.  The unemployment rate is 
hovering around 6.4 percent, down from a 2009 peak of 8.3%.  Total 
debt is 53% of GDP.   The Central bank has a good cushion of 
international reserves and, in order to ensure sufficient 
financing, the GOU proactively secured credit lines from IFIs in 
2009 for almost $900 million ($400 million from the World Bank, 
$285 million from the Inter-American Development Bank and $400 
million from the Andean Development Corporation (CAF)).  Uruguay's 
credit rating has been improving steadily.  Relatively low levels 
of corruption and a stable legal environment contribute to an 
attractive investment climate-which is however limited by the small 
size of its domestic market and the disfunctionality of Mercosur as 
a customs union. 
 
 
 
 
 
President-elect Mujica 
 
---------------------------- 
 
 
 
¶6. (SBU) After outgoing President Vazquez, the earthy, charismatic 
Jose "Pepe" Mujica is Uruguay's most popular politician.  Still, 
Mujica's historic transformation -- from a Tupamaro guerrilla who 
spent around 15 years in prison, to leadership of the country -- 
was considered highly unlikely only two years ago by most observers 
of Uruguayan politics, who thought him too polarizing a figure. 
Aided by President Tabare Vazquez's achievements and a 
man-of-the-people's ability to connect with the electorate, 
however, Mujica was successful in extending his appeal to the 
political middle ground.  Not only did Mujica signal continuity 
with Vazquez's moderate policies by selecting ex-Finance minister 
Danilo Astori as his running mate, but he has also tempered his 
rustic charm of late, cultivating a new, more clean-shaven image. 
During a campaign visit to Brazil, photographs of the usually 
shambolic Mujica resplendent in his first-ever suit made national 
headlines and served to counter charges that his homespun image 
would make him an other-than-ideal representative of Uruguay 
abroad. 
 
 
 
¶7. (SBU) Although sometimes portrayed by political enemies as a 
volatile left-winger, Mujica has shown himself to be a pragmatic 
politician who can build bridges and consensus.  He constantly 
reminds followers that their side has no monopoly on the truth, and 
his public pronouncements almost always stress conciliation and the 
need to understand other points of view.  In that regard, he has 
made concrete signals to work across party lines to build more 
housing, improve public education, address crime, and reform the 
state bureaucracy, and has also announced similar intentions with 
regard to continued opening of the economy, such as plans to 
revitalize the national rail system.  He has built confidence in 
the private sector by promising a secure investment climate. 
 
 
 
¶8. (SBU) Mujica continues to live in a humble property in an 
undistinguished area of Montevideo, which he has long occupied with 
his wife Lucia Topolansky and their three-legged dog, Manuela. 
Topolansky is also an ex-Tupamaro, and she is the current leader of 
Uruguay's Senate.  Mujica has always abided by salary restrictions 
imposed by his political movement, which means that he will only 
accept around USD 1,800 dollars per month from the Uruguayan 
president's salary of over USD 12,000 per month. 
 
 
 
President-elect Mujica's Election Victory 
 
--------------------------------------------- ---- 
 
¶9. (U) Mujica and his Frente Amplio (FA) coalition won big in 
Uruguay's November 2009 runoff election.  He beat National Party 
challenger Luis Alberto Lacalle by ten points (53-43), and the FA 
had earlier secured absolute majorities in both houses of 
parliament as a result of October 25 general elections. 
 
 
 
Foreign Policy: A Work in Progress, but Good Early Signs 
 
--------------------------------------------- ---------------------- 
- 
 
 
 
¶10.  (SBU) We expect an initially cautious approach to foreign 
policy as Mujica's new team takes office and begins to become 
familiar with international and regional issues.  We should 
anticipate some degree of rhetoric and symbolic gestures reflecting 
the intellectual formation of Mujica and much of his cabinet in the 
revolutionary Latin American zeal of the 1960s.   That will 
sometimes compete with the pragmatism and focus on current national 
interests we believe will be the final guide to their policy. 
Treating them as a respected and independent partner will be a key 
to working past the rhetorical 'shots'; your visit for the 
inauguration sends an invaluable signal of that respect. 
 
 
 
¶11.   Mujica plans to focus on regional integration and shoring up 
ties with Argentina and Brazil.  Mujica has expressed admiration 
for the progress made in recent decades by the People's Republic of 
China, and the career diplomat tapped by Mujica as his foreign 
minister, Luis Almagro, was Uruguay's ambassador to that country. 
Mujica has made an effort to demonstrate that he understands the 
importance of the bilateral relationship with the U.S., and would 
like to continue and expand our educational and scientific 
exchanges.     He has been clear that he will continue to support 
Uruguay's peacekeeping participation. 
 
 
 
¶12. (SBU) We've had strong support from Uruguay on regional and 
multilateral issues in the last two years, standing for 
reinforcement of democratic institutions, prudent economic 
policies, and the peaceful resolution of conflicts.   Uruguay has 
done excellent work in Haiti, where it has one of the largest 
contingents of peacekeepers.   The GOU has played a constructive 
role on regional issues, such as the OAS General Assembly 
deliberations on Cuba, the debate over the U.S.-Colombia Defense 
Cooperation Agreement, and Honduras, and is now a full member of 
the Pathways to Prosperity initiative.   As a member of the 
International Atomic Energy Agency's Board of Governors, Uruguay 
supported us with regard to an important resolution 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 also helpful recently on anti-Israeli resolutions, the 
Goldstone Report controversy, and on various single country 
resolutions of interest to the U.S. 
 
 
 
Trade Issues 
 
--------------- 
 
 
 
¶13. (U) Conversations with Mujica and Foreign Minister Almagro may 
include the issue of access to the U.S. market for Uruguayan lamb 
and citrus.  The USDA conducted an evaluative survey of fresh lamb 
meat in Uruguay in May 2007 and is working on a proposed rule to 
allow imports subject to conditions to prevent the introduction of 
Foot and Mouth Disease.   GOU efforts to seek market access for 
citrus have been ongoing for several years.  The Uruguayan citrus 
pest risk assessment (PRA) has been on hold pending a USDA domestic 
policy evaluation on citrus canker.  Similarly, the U.S. seeks 
access to the Uruguayan market for U.S. beef and chicken.  Uruguay 
closed its market to U.S. beef in 2003 due to Bovine Spongiform 
Encephalopathy (BSE), but has since reopened for U.S. bovine 
genetic products.  In August 2007, the United States requested 
access for all U.S. beef and beef products and live cattle 
consistent with the World Organization for Animal Health (OIE) 
guidelines.  In June 2009 the GOU began work on a risk analysis for 
U.S. beef.  In 2007, Uruguay granted market access for U.S. turkey 
 
and turkey products, but did not include chicken and other poultry 
species in the approved health certificate. USDA has requested 
specific import requirements for chicken meat following completion 
of Uruguay's study in accordance with OIE guidelines.  Almagro has 
also raised with us Uruguay's desire for improved access to the 
U.S. market for wool textiles that could be achieved by adding 
Uruguay to Andean Trade Preferences. 
 
 
 
Bilateral Assistance 
 
------------------------- 
 
 
 
¶14. (U) The USG provides modest levels of bilateral assistance to 
Uruguay, in part because the relatively high level of per capita 
income (around USD 9,100) affects the country's eligibility for 
USAID and MCC programs.  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 (which 
they repaid in 10 days) and increased public and private donations 
to hospitals, schools, and humanitarian organizations, but that 
short-term assistance has mostly ceased. 
 
 
 
¶15. (U) The Inter-American Foundation, active in Uruguay since 
1974, funded three grants for at a total of USD 279,000 in 2008. 
The Embassy's Office of Defense Cooperation also funds donations 
ranging from equine therapy and rural dental clinic equipment to 
health clinics and recreation centers to communities around the 
country, using DOD Humanitarian Assistance Project funds.  The USG 
has ongoing technical assistance programs in place run by Treasury 
and the FAA, and receives small amounts of funds for provides INL 
counternarcotics funding. 
 
 
 
Public Diplomacy and Outreach 
 
-------------------------------------- 
 
 
 
¶16.  (U) The U.S. approval rating here recovered substantially from 
the lows reached in the earlier part of the decade (even before the 
election of President Obama), rising to the 50 percent level in 
2008 and 77 percent at the end of 2009.  We credit much of this to 
our diversified outreach strategy, which includes active youth 
programs, social networking, work with NGOs and travel to the 
Interior.  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.  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 USD 150,000 in 2009. 
Nelson