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Lacalle running on trade in Uruguay
Journal of Commerce / August 7, 1998

By Larry Luxner

MONTEVIDEO, Uruguay -- Former President Luis Alberto Lacalle says that despite an improving economy, Uruguay is too expensive for foreign investors -- and that its situation within the Mercosur trade bloc still leaves a lot to be desired.

In an interview last week, Mr. Lacalle, 57, said there's a good chance he'll get his job back in October 1999, when Uruguayans go to the polls to elect a new president.

"Uruguay has seen its economy grow 32% over the last 10 years," said Mr. Lacalle. "That means more money, but people feel it's not going in their pockets. Uruguay must make important changes within its economy to compete in Mercosur."

Mr. Lacalle -- who was president from 1990 to 1995 -- says the recent hiking of Mercosur's external tariff from 20% to 23% was a "sin," and that "Brazil has the habit of applying non-legal barriers to trade, and that has made life difficult for Uruguayan exporters."

"The difficulties arise from bureaucratic non-tariff barriers from Brazil. They ask for certificates of health, or additional papers from a third-rate office. Those are much more effective barriers to commerce than the legal barriers."

The Blanco Party politician, whose office library is filled with books ranging from Bill Clinton's "Putting People First" to Rush Limbaugh's "See I Told You So," says that if returned to power, he'd be more aggressive about privatization than Uruguay's current president, Julio Maria Sanguinetti. Lacalle also vows to bring down port fees and electricity prices, as well as overhaul the social security system -- one of the most generous but costly in Latin America.

"Ours was a much more active government. Sanguinetti is only finishing the things we began," he says. "For example, we privatized the port. The Port Reform Law was pased in 1992, during my administration. But we are not reaping all the benefits of our geopolitical position because the country is expensive for foreign investors. Mercosur is a great opportunity. In order to take advantage of it, Uruguay must become a leaner country. More must be done."

Last Thursday, Mr. Sanguinetti met with Mr. Clinton at the White House, where the two leaders reiterated their commitment to creating the Free Trade Area of the Americas by 2005. They also discussed regional security, environmental issues and international peacekeeping responsibilities.

Mr. Lacalle says the two issues for Uruguay are unemployment -- now running at 12-13% -- and education. According to the latest polls, Mr. Lacalle now has the support of 45% of Blanco Party members, followed by 25% for Juan Andres Ramirez and 20% for Alberto Volunte. If he wins his party's April 1999 primaries as expected, Mr. Lacalle will probably face Luis Hierro or Jorge Batlle of the ruling Colorado Party in the November 1999 general elections. Mr. Sanguinetti, 62, cannot run in this election, since the Uruguayan constitution prohibits presidents from serving more than one consecutive term.

"I'm confident of winning, because the Lacalle-Sanguinetti administration has given Uruguay a serious political and economic policy which can be seen and felt. In eight years, inflation went from 130% to single digits," he told The Journal of Commerce. "Sanguinetti was very courageous and intelligent to follow serious policies, and that's a mature attitude of a statesman. I'm more an activist, he's more a gradualist. The combination of both was good for the country. I blazed the new trails, and he followed them. That's why I want to become president once again."

Regarding Montevideo's relations with Washington, Mr. Lacalle says Uruguay isn't doing enough to promote itself in the United States -- the largest market in the world.

"I think we should concentrate all promotional efforts in the diplomatic service. If now, how do we justify 45 ambassadors around the world? Our foreign policy is not that important. Instead of organizing Uruguay XXI [a recent Miami trade show], all the efforts should be put into the Foreign Ministry, where we already have the resources."

He adds: "I think we should have more trade representatives in the United States. I would promote Miami as one of the centers of Uruguayan trade promotion. It's a very important place to milk as an opportunity. I would also open a site on the Internet for Uruguayan exports."

Asked his opinion of a proposed $1 billion bridge linking Uruguay to Argentina over the Rio de la Plata estuary, Mr. Lacalle said he's skeptical.

"I'm very much in favor of the bridge," he said. "It's very important for the port of Montevideo, but the economic basis upon which we're calling for offers doesn't add up. It's too expensive to be self-financed by its own traffic."

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