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Resisting neoliberalism: a lesson from Uruguay

by Nicolò Giangrande

Uruguay’s presidential elections of 29 November 2009 were a historic and previously unimaginable event: José “Pepe” Mujica, a former guerrilla from the radical left and the candidate of the Frente Amplio (Broad Front) came to power democratically with 52.39 per cent of the vote, leaving the Partido Nacional’s candidate, Alberto Lacalle, in second place with 43.51 per cent.

In front of the crowd gathered on the Rambla de Montevideo to celebrate the election victory, the newly elected President of the Oriental Republic of Uruguay addressed words of reconciliation to the other Uruguayans absent from the celebration: “Friends, let us remember on this happy night that we have compatriots who are sad, and they are our brothers in blood, and therefore we are neither victors nor vanquished. We have just elected a government, but it is not the owner of the truth, let us all be clear about that.”

Mujica, the “old warrior” as he once described himself, might well have wished to take revenge when he came to power, after years of imprisonment in sub-human conditions and the failure of his revolutionary struggle.

However, on the day he was elected he delivered a speech outlining his high level of political commitment which, without detracting from his radical tone, and using simple and direct language, sought to build bridges with the other parties and activists who were not there to celebrate the election victory.

Professor Daniel Buquet from the Institute of Political Science of the Social Sciences Faculty of the University of the Republic of Uruguay (UdelaR), described to Equal Times the conflict-driven climate of the 1960s, when Mujica and other revolutionaries – including Raúl Sendic – took inspiration from the Cuban revolution and founded the National Liberation Movement (MLN), also known as the Tupamaros.

“The Tupamaros were formed at the beginning of the 1960s, and their action reached a height at the end of this decade and the beginning of the next,” said Buquet.

“In those years the country was just coming out of a long period of economic stagnation which began in the mid-1950s. Social organisations were getting stronger and merging, generating a growing protest movement.”

The armed struggle and militancy of the Tupamaros led to Mujica spending 14 years in prison as one of the “nine hostages” – the prisoners that the Uruguayan dictatorship (1973-1985) threatened to execute if the guerrillas still at large committed any kind of act in the country.

When democracy was restored in Uruguay in 1985, the Tuparamos decided to abandon arms and enter the political arena legally, joining the Frente Amplio a few years later.

Gabriel Bucheli, a lecturer and researcher in the History of Uruguay at the UdelaR, interviewed by Equal Times, explained that “the politico-military events of 1972 and the long period of imprisonment and exile of the majority of their activists led the MLN to take a profound, critical look at itself.”

According to Bucheli, this self-criticism “was never presented clearly in public, but it could be seen in its actions” and, after “overcoming some of their past differences, the Frente Amplio accepted the MLN into its ranks in 1989.”


The numbers

Uruguay’s general economic good health and progress are confirmed by all the economic indicators of the various international and regional organisations: from the International Monetary Fund (IMF) to the World Bank, the International Labour Organisation (ILO) and the Economic Commission for Latin America and the Caribbean (ECLAC).

Hence, despite the negative effects of the international crisis and global uncertainty, Uruguay’s GDP grew by 3.9 per cent in 2012, according to regional forecasts by the IMF in October 2013 which also foresee a slowdown: 3.5 per cent in 2013 and 3.3 per cent in 2014.

Similarly, according to World Bank data, per capita GDP has risen from US$8,996 in 2009 to US$14,703 in 2012. Given this information, it is no surprise that the World Bank ranked Uruguay as a high-income country for the first time in its history in July 2013.

Uruguay is one of the Latin American countries which has today exceeded pre-crisis employment rates, and where there has been a substantial increase in the real minimum wage, as underlined in the ILO’s World of Work Report 2013.

The 2013 edition of the ECLAC’s Social Panorama of Latin America, meanwhile, shows that in 2012 5.9 per cent of the population of Uruguay were living in poverty, with 1.1 per cent living in extreme poverty.

These are some of the lowest averages for the Latin American region.

The statistics help us understand a specific economic context, but they are like a snapshot, showing a static situation. Of course this is not enough to explain how this change came about and the type of variations that enabled this to be achieved.

The public agents responsible for bringing about Uruguay’s change applied an alternative development model, based on an inclusive approach in the implementation of public policy.

From the outset, the Mujica government placed a strong emphasis on social policies as the tools for tackling poverty and inequality, developing universal public programmes focused on education, health, housing and jobs.

There was also a fundamental change in the tax system, with the implementation of a more progressive scale of taxation, where the aim was that the burden should not fall solely on workers and pensioners, but that there should be a more equitable distribution of fiscal responsibility.

Similarly, careful attention was paid to pay policy, especially through the increase in the minimum wage.

Daniel Olesker, Minister for Social Development in the Mujica government, interviewed by Equal Times, said that this change was based on “leaving aside the concept of the “neutral” State that abandons its people, and developing an active State, that was involved in politics, in the economy, in society.”

“Pay policy and policies to stimulate job creation and formalise employment played a key role” continues Olesker, together with “a budgetary decision to increase public social spending and a change in the structure of the tax system to incorporate progressive taxation”.

The defining feature of the Frente Amplio’s social reforms is “the separation between contributions to the funding of social policy and access to the goods and services provided by it”. For the Social Development minister, social policy “does not have a price, it has a value, and therefore goods and services are distributed according to need, regardless of how much someone has contributed to it financially, which depends on household income”.

Olesker, who sums up the Mujica presidency with the word “equality”, explains that the reforms carried out and all the policies to prioritise the most vulnerable sectors “didn’t come from thin air; they were the result of relevant organisational and social experience.

In this sense Uruguay is an example of the role played by the trade union and student movement in the construction of political party that came to power.”


The Uruguayan lesson

From this small country in southern Latin America – dwarfed by the two giants of Brazil and Argentina – we have seen the rebuttal of the classic economic mantra preaching “growth first, distribution later”, achieving both growth and the distribution of resources at the same time.

The Uruguayan experiment begun by the Frente Amplio is the empirical proof that it is possible to follow another, fairer and more democratic path, resisting the neoliberal doctrine handed down by the international financial institutions based exclusively on growth at any price.

It is yet more proof that the much-lauded “market” is not the best means of generating equality and social inclusion.

Today’s Uruguay combines growth and distribution, progress in the domestic and export market, higher pay and employment, with an inflation rate that – although higher than the target set by the Central Bank of Uruguay – is under control, and, at the same time, the capacity to create new spaces for freedom, tolerance and rights.

Finally, the President of Uruguay is the living proof that it is possible to come to power with a critical view of the predominant economic model through the popular and democratic vote, setting in motion sustainable and inclusive development.

It is a political, economic and social lesson to be learnt.

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