Thursday, September 21, 2006

ENCE with one foot out of Uruguay

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Spanish corporation ENCE has announced that the construction of their pulp mill won't continue, and fired 40 employees from the Montevideo's office, which is about 60% of their staff there, and around forty episodes of The Apprentice, right?

Yesterday while I was watching the news I tried not to take it personally but it's not easy, the news was actually that the company was leaving the country. I can't help to think in all those who relocated their families, leaving former jobs to go to Fray Bentos to work. Word is that this is the first step in ENCE's withdrawal plan.

ENCE authorities declared that the pressure the Argentinan goverment was applying on international banking organisms not to approve loans for the construction of pulp mills in Uruguay played an importan role in the decision, as well as the conflict between Uruguay and Argentina on the whole subject.

Today the news were a bit brighter, ENCE declared that is NOT leaving Uruguay, just relocating the pulp mill, but who knows, some weeks ago they said they were not going to fire anyone.

It kinda feels like Argentina's bullying is prevailing. It's unfair, and depressing.


Anonymous said...

I'm a American considering taking up secondary residence in your country (as I understand your laws, the purchase of Uruguayan property valued at $100,000+ USD qualifies the purchaser for Uruguayan citizenship).

Currently there is a chess match going on between Venezula and the US over Mercosur, with Uruguay being lobbied heavily by the US. One could read between the lines that with Spain's withdrawl of ENCE's pulp mill project, the US is putting the arm on Spain (meaning the US is influencing Spain to get Uruguay in line toward the US's goals). Could your latest report mean that Chávez is winning both the hearts and minds of your citizens but not your leadership? Or is Argentina influencing Spain. Your opinions please.

Below is a NY Times articles recently quoted on a service that I subscribe to...

[Uruguay is being wooed by Washington in an attempt to negotiate a bilateral trade agreement. If successful this would force Argentina and Brazil into doing the same, which would weaken the regional trade group Mercosur. Venezuela is also a member of Mercosur and is doing all it can to pull Uruguay away from Washington’s influence.

Venezuela wants to see Mercosur become a political entity consisting of an army, but none of the other member nations seem to be (outwardly) interested in such a move. The Uruguay government is split as to which direction the nation should move towards. The work of Hugo Chavez to raise the living standard of the poor has undermined Uruguay President Tabaré Vázquez negotiations with Washington. – MK]

Uruguay at Center of Lively U.S.-Venezuela Chess Game

September 12, 2006
The New York Times

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

MONTEVIDEO, Uruguay — Long taken for granted by its much larger neighbors, Uruguay suddenly finds itself one of the main fronts in the struggle between the United States and Venezuela for dominance in South America. The Bush administration and President Hugo Chávez of Venezuela are jockeying for position here, each trying to undercut the other by winning over Uruguay’s left-wing government.

Washington is offering a free-trade agreement that would pull Uruguay into the United States’ orbit and weaken Mercosur, the regional trade group to which Uruguay and Venezuela belong. Mr. Chávez has countered with attention-getting investments, subsidized oil, acts of charity and a growing alliance with left-wing factions of the ruling Broad Front.

Pablo da Silveira, a professor of political philosophy at Catholic University of Uruguay and a political commentator, likens what is happening to “a geopolitical chess game, in which Venezuela is playing the black pieces, in other words, oil” in an effort to gain influence. In this small, strategically situated place, he added, “Chávez and the United States are seeking the same thing, and for the same reason: to make Uruguay a test case” for their widely varying visions of the region.

Mr. Chávez, for example, has pledged to invest an estimated $500 million in an oil refinery here and has invited the Uruguayan state oil company to join its Venezuelan counterpart in exploration projects. As it has done in Cuba and the Caribbean, Venezuela is supplying petroleum products at a discount, and Mr. Chávez has promised that a gas pipeline he wants to build from Caracas to Buenos Aires will pass through here.

Venezuela has also put up money that allows some unprofitable ventures in Uruguay that employ relatively large numbers of people — like tire, glass and sugar plants — to stay in business. Most recently, the Chávez government has offered support for an ailing government financial cooperative that makes small loans to people and small businesses that normally do not qualify for bank loans.

“It doesn’t cost Chávez a lot of money, but it generates a lot of good will,” said Danilo Arbilla, a former editor in chief at the weekly magazine Búsqueda. “That way, when he comes here, he’s solved people’s problems, and they will go out for him.”
Not to be outdone, the United States has countered with a proposal to build a medical and dental clinic near a working-class area of Montevideo. Left-wing groups aligned with Mr. Chávez maintain that the offer is really a plot by the Pentagon to establish a military base in Uruguay.

The Bush administration’s main thrust, however, is its offer of a free-trade accord that would allow Uruguay to increase exports of meat, leather, cheese and other products to the United States.

Uruguay’s population and economy are small, with barely three million people and total trade with the United States amounting to slightly more than $1 billion last year. But the country is a member of the Mercosur customs union, which includes Brazil and Argentina, and a free-trade agreement with the United States would weaken the group and put pressure on Uruguay’s two big neighbors to negotiate bilateral accords with Washington.

Uruguay’s relations with Argentina and Brazil have been tense recently. Argentina is trying to block work by a Finnish-Swedish consortium and a Spanish company on two cellulose plants, the largest foreign investment in Uruguay’s history.
Brazil declined Uruguay’s request to mediate the dispute — Argentina says the plants violate a border treaty — which has raised what Uruguayans consider unreasonable barriers to trade and torpedoed the candidacy of an Uruguayan, Carlos Pérez del Castillo, to be director of the World Trade Organization.

Early this year, Tabaré Vázquez, Uruguay’s first Socialist president, told a radio station here that “Mercosur has become more a problem than a solution.” But in an interview in late August, he said his country had no intention of leaving the group, but wanted instead “more and better Mercosur,” without “giving up our right to open ourselves to the rest of the world.”

Mr. Vázquez was reluctant, though, to say explicitly that he favored a free-trade agreement with the United States. Brazil and Argentina have suggested at various times that such an accord with the United States would be incompatible with membership in Mercosur and could be grounds for expulsion.

“Both countries want to improve their commercial exchanges with each other, and we have agreed that paths exists that allow us to achieve that objective,” he said, referring to the United States and Uruguay. “We’ve set a methodology and a timetable,” he added, a reference to the fact that President Bush will lose his authority to negotiate “fast track” trade agreements June 30, 2007, unless Congress renews it. Though the United States has already signed an investment treaty with Uruguay, Washington initially showed little interest in a free-trade accord. Two Bush administration officials had all but ruled out the idea before Mr. Bush announced, during a visit by Mr. Vázquez to the White House in May, that he favored “extending our commercial relations” and suggested that talks begin here as soon as possible.

Mr. Bush made his offer as Venezuela was preparing to join the Mercosur group, which was founded in 1991 and is based here. Venezuela was formally accepted into the group in July, and Mr. Chávez’s public statements have made it clear that he would like to transform Mercosur into more of a political alliance with an anti-American tint.

But Mr. Chávez may have overplayed his hand by suggesting the creation of a NATO-like alliance and a common Mercosur army. That proposal was not well received in the four original member countries, Argentina, Brazil, Paraguay and Uruguay, all of which endured military dictatorships in the 1970’s that committed major rights violations, and Mr. Vázquez said in the interview that the idea did not interest him.

Within Mr. Vázquez’s governing coalition, though, left-wing groups close to Mr. Chávez and his “Bolivarian Revolution” to raise living standards for the poor have been working to undermine Mr. Vázquez’s flirtation with Washington. Montevideo is awash in graffiti that emphatically proclaim “No F.T.A. with the Yankees!” and an “anti-imperialist forum” held here late in August called for closer ties with Venezuela.
At a 10-hour televised congressional hearing here in late August, those differences were on display.

Uruguay’s finance minister, Danilo Astori, argued for an accord with Washington. Its foreign minister, Reinaldo Gargano, made the case for Venezuela: a 314 percent increase in trade in the first half of this year, more than a score of cooperation accords signed in the last 18 months and the strengthening of what he called “South-South relations.”

But “the Chávez option is only interesting if he can compensate what we lose in trade opportunities each year by being inside Mercosur,” an official, speaking on condition of anonymity because Mr. Vázquez has said only he is authorized to speak on the subject. “But his internal situation won’t let him spend that kind of money year after year. He can afford millions, but not billions.”

gabouy said...

Great subject, I'll comment tonight on it..

Anonymous said...

Read recently that Mexicans were using American corn to make tortillas because the American corn is cheaper than the corn grown in Mexico.Also stated that many Mexican farmers were being put out of business.How is it possible that corn grown in American can be cheaper than Mexican corn???HUGE FARM SUBSIDIES!

Anonymous said...

Perdón, signifiqué decir a norteamericano. ¿Somos todos los americanos, sí?

gabouy said...

Great article, I think it's accurate.

I think there are two things going on. The first one is the reality that Uruguay's gov is flirting with both, the states, and venezuela, in an attempt to get the most out of this situation. The second one is that Uruguay's goverment is truly schizophrenic when it comes to strengthening relations with the US. Let us remember that some parts of the goverment did fight and spend years in jail in the name idiologies opposed to those preached by the states. So they really face a dilema on this arena.

Venezuela has just opened a new bank here, called Bandes. It's tv commercials are targeted to low income families, and it's filled with promises of affordable loans to build a better future. It's making people talk. Here for us is very difficult to get loans, the national banking organism seems to be frozen. How am I going to buy a house is a mystery to me, even though I'm a relatively well paid professional, with an university degree.

So if I think who is making more points with the people, I'd say Venezuela is making more noise. But I'd have to agree with the article I too question the sustainability of this kind of investments. Today we pay hundreds of millions each year, only in taxes to the US, this costs would automatically disappear with an FTA.

In my opinion, the vision for the region should be to unite into an emerging block naturally leaded by Brazil, and followed by Argentina. Sadly this is nowhere to be seen in the near future. Brazil is facing internal problems related to corruption issues, and Argentina...well, argentina is just neither predictable, nor dependable, and seems to be doing everything within its power to stop pulp mills investments in Uruguay. So if this is the work of an ally, I'll pass on more allies like Argentina please.

Brazil has failed Uruguay, condoning the misbehavior of Argentina regarding the bridge blockades, when the Mercosur's legislation "in theory" assures free circulation of people and goods in the region.

Maybe the future of Uruguay really lies in it's "Switzerland of America" nickname, and maybe we'll be just better off without the Mercosur, as Switzerland seems to be without the European Union.

If I were Brazil and Argentina I would take Uruguay's case far more seriously than they seem to be doing, since Uruguays departure from Mercosur could lead to a domino effect, followed by Paraguay, and discouraging other countries to take part in it, rendering the organism useless.

Going back to Venezuela, Chavez behavior is starting to freak me out with his new friendship with iran, and the affair with the non aligned conclave. IMHO the US should worry about him, the guy seems to be gathering friends and trying to make new ones from all over the world, and being an ex militar as he is, forming a military force sounds like something he would try. I pitty the people living in Venezuela, for me the guy is a clown with a big mouth with the only true purpose of making headlines and staying in power.

Anonymous said...

Some people in the know in my country are concerned over Chavez and his rhetoric, however leftists (and rightists, quietly) in the US have embraced sovietism since its inception as sovietism is just another word for fascism. To me, the little that I have read about Chavez leads me to the conclusion he's another power hungry collectivist (albeit with an oil card to play) no better (or worse) than Lenin, Guevera, Mussolini, etc. Right or left, these collectivists have their agenda and it doesn't include the middle class, but that's just my opinion.

So do you think Uruguay can become South America's Switzerland? Didn't Uruguay's currency suffer greatly too during Argentina's currency crisis of the late 1990's? How, in your opinion, can your country separate herself economically from Argentina and Brazil?

Again, in my opinion, don't count on any long-term or long lasting economic aid from the US. The US economy is tenuous at best (with an economic tsunami just off shore at worse) and there are plenty of beef producers here and in Canada should demand lessen or transportation costs (the price of oil) become prohibitive. I'm aware that besides the US, Argentina, & Brazil, your next largest trading partners are Germany & Italy; are trade agreements currently being pursued between Uruguay and the rest of Latin America and Europe, Asia, Russia, Japan, India?

Keep writing as I find your insights very informational and interesting.


PS: If my due diligence points me towards Uruguay as a safe haven from the US and a trip is planned for March 2007, could you assist me in finding a translator/guide? My conversational Spanish capabilities are truly lacking.

gabouy said...

>So do you think Uruguay can become South America's Switzerland?
It's hard to tell, what is certain is that Uruguay needs to find a place in a global market. If that can be accomplished within South America, better, if not, elsewhere.

>Didn't Uruguay's currency suffer greatly too during Argentina's currency crisis of the late 1990's?
Definitely, so much that the topic deserves a post on itself.

>How, in your opinion, can your country separate herself economically from Argentina and Brazil?
For instance encouraging trade with non neighbor countries, in industries where distance doesn't matter that much, like IT.

>are trade agreements currently being pursued between Uruguay and the rest of Latin America and Europe, Asia, Russia, Japan, India?
Well, yes, right now Uruguay is pursuing trade agreements with China an India, as well as with the states.

gabouy said...


Regarding the translator, please write to this address fromuruguay[at] (remember to change the [at] with an @)


Anonymous said...

I don't know about Chavez, but to compare Lenin and Che Guevara to Mussolini is a colossal sacrilege.

Anonymous said...

Y después me preguntan por qué tengo tan planeado irme de Uruguay =/...

Todo lo que decís es muy cierto. Que Argentina esté haciendo lo que quiere con nosotros es una de esas cosas que me pega en el quinto forro de las bolas que no tengo. ¿Y después se supone que tengo que sentir algún tipo de orgullo nacional? Ta, el tema es mucho más complicado, pero en fin. Sigh.

¿Sabés lo que es que me mata? Toda la quimbamba esa de que tengo 23 años casi y sería absolutamente imposible irme a vivir sola. Porque todavía estudio (en universidad privada) y porque todavía no me dan un laburo que pague como la gente (por faltarme 6 meses para recibirme) y porque se me dio la loca de estudiar periodismo. Estoy laburando en una empresa de software y te juro que lo único que pienso es... ufa, tendría que haber prestado más atención en las típicas clases liceales de matemáticas para que por lo menos un poquito me hayan gustado... y de ahí a ingeniería de sistemas. En vez, se me dio por las letras. Do not pass go, do not collect $200.

Bueno, en fin. 100% de acuerdo en la mayoría de las cosas. Voy a dejar de pesimismear como tipica uruguaya. Ah, y feliz cumple por lo del post que viene después. Yo acabo de empezar a escribir uno ("¿Por qué no escribís un blog?" "Eh... ¿por qué no?") y todavía no tengo nada cortito y al pie escrito especialmente para el blog pero ojalá pronto lo tenga. El punto es que te voy a linkear, está re bueno el tuyo (pa ese 're' recontra sacó a la luz la totalidad de mi status social).

Saludos, seguí así :D

gabouy said...

tengo un companiero de trabajo que pasa todo el dia diciendo:

"que dificil ser uruguayo..., pero (ironico maaal) que lindo...."

o "ser uruguayo es heroico de por si"

bueno, arriba, suerte con el blog!

Anonymous said...

Un Tratado de Libre Comercio con los Estados Unidos, seria una grande oportunidad para el comercio de Uruguay. Posibilidades nuevas de inversion privada y crecimiento. No hay que olvidar el trabajo hecho por Chile, hoy en dia, aquellas personas que viajan, vemos productos andinos por todos lados. Mientras los productos uruguayos no existen. Me gustaria que Uruguay continuara una linea parecida de negociacion. Ya que es el unico modelo posible de desarrollo y real.
En la produccion la ventaja de la diferentes estaciones, debe ser mensionada. La calidad de los productos uruguayos. Y por el ultimo la perdida de mercados por parte de otros paises latinoamericanos que si firmaran con los EEUU.

Gaston Harreguy

Anonymous said...

this has been educational. i'm sorry that uraguay is also being caught in the struggle for dominace. there is to much going on there to have this added unfairness. with regard to a 'free trade agreement'--there is nothing free when dealing with rich and powerful people who are used to controlling and having their way.god bless you.

Anonymous said...

"Perdón, signifiqué decir a norteamericano. ¿Somos todos los americanos, sí?"

Yes! I was raised and still live in the US, but have spent most of my life studying the cultures of SA and I am ashamed of how those in the USA think they are the only Americans. How do they think they can do as they wish with South American countries? It is the new colonialism. Subtle slavery.

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