Uruguay: The Economic Crisis and the Decay of Democracy

by Lars Peterson

The 1960s and 70s witnessed many economic and political changes for Latin America. Among these changes was the spontaneous growth of domestic economies that resulted in some cases in political tensions culminating in many countries with the downfall of democracy. Included in this tragic list is the small República Oriental del Uruguay. The demise of Uruguayan democracy came as the result of a severe economic crisis and the military’s zeal to repair their country’s market and ensure civil order. The crisis of import-substitution industrialization that began in the mid-1950s triggered a decline in real wages and undermined the welfare system. This caused the labor unions to militarize and ignited the fires of insurgency. The crisis polarized segments of society as ideological conflicts developed regarding how to deal with the economy. The military in turn mobilized, as they had been trained to do, to restore public order, and in so doing usurped political power from civilian-run democracy. Following their appropriation of the government, they made their own attempts to stabilize a reeling economy.

Uruguay has had a very long tradition of comparatively democratic institutions. Such a tradition gave Uruguay the name “jardín de la democracia.”¹ Until the military take-over of 1973, there had been few interruptions to peaceful democracy. The year 1904 marked the end of the last revolt, terminating a period of political violence, corruption, and division that had characterized nineteenth century Uruguay.² From that time until the early 70s, there had been a brief military dictatorship from 1933-1938 and a coup conducted, surprisingly, by the fire department in 1942.³ Certain mechanisms had gradually been instituted from the beginning of the twentieth century onward to ensure democracy. Indeed, complex checks and balances exhibited “the country’s demoniac zeal for limiting authority and thereby inadvertently suffocating it.”⁴

Among these systems to prevent the consolidation of power, an amendment to the constitution in 1951 institutionalized a collegiate presidency. Citizens elected a nine-man presidency for a four-year term. Six of those nine members represented the majority party and the remaining three were members of the opposition party. The four of the majority party to receive the most votes would each act as the chairman of this committee presidency, each serving for one year. Such a governing body, as might be expected, functioned with little degree of efficiency.⁵ Similar complexities existed within the legislative branch.⁶

Though a majority of Uruguayans were Catholic, Uruguay was the most anti-clerical country in South America and there was a strong separation between church and the State. Religious holidays such as Christmas, Epiphany, and Easter were officially called Family Day, Children’s Day, and Tourist Week respectively. Many distinguished families were declared atheists. One newspaper refused to refer to the Pope by his religious title, calling him Mister instead, and for many years declined to capitalize “God.”⁷

Uruguay’s tradition of democracy included having given equal legal status children of illegitimate birth early in the century.⁸ The country had never permitted slavery. It was also one of the first countries in Latin America to give women the right to vote and it made voting mandatory.⁹ Taxpayers paid for the campaigns of all candidates including those of the Communist Party.¹⁰

The origins of Uruguay’s labor unions are found in the latter end of the nineteenth century with the advent of large numbers of European immigrants. Early unionization was led first by anarchist and then socialist workers.¹¹ By the 1890s, labor union action had achieved prominence in negotiations for concessions. In 1905 massive strikes secured better wages and an eight-hour work-day.¹² By that time the first nationwide syndicate, namely FORU (Workers Federation of the Republic of Uruguay) had been organized.¹³ These unions found patronage with President José Batlle y Ordóñez (1903-07 and 1911-15) who emphatically supported strikers. Moreover, he proposed and eventually succeeded in passing labor legislations that granted urban workers a weekly day of rest, minimum wage for some jobs, retirement, old age pensions, and workers’ compensation for industrial accidents. Although lagging far behind urban reforms, legislation finally included rural workers in 1943.¹⁴ By the 1950s, the urban and rural workers had been reasonably incorporated into public and political participation.

These labor unions, unlike many of their Latin American counterparts, did not solidify ties with any particular political party. Generally, however, workers voted for the Colorado Party, preferred by the middle class. The said party’s policies came to exhibit a long-lasting alliance between workers and industrialists. The “welfare state” which the party created appealed to workers, and so it should come as no surprise that despite their Marxist ideals, no major challenge to the State was made until the mid-century economic crisis.¹⁵

With the exception of the world economic crisis of 1929, Uruguay for the first half of the century achieved a prosperous economy. Exports based largely on the beef industry helped create a comfortable living for most Uruguayans. The export economy had also provided means for some industrialization. This economic success also gave Uruguay the name “the Switzerland of America.”¹⁶ Following World War II, rapid industrial development in Uruguay achieved a promising total manufacturing annual growth rate of 8.5%.¹⁷

Uruguay, following principles of import-substitution industrialization, instituted heavy protectionism and subsidies that initially aided industrial growth, yet led to high vulnerability. As these import controls prevented foreign goods, similar to those manufactured in Uruguay, from entering the country companies experienced little competition. This resulted in inefficiencies of costs and scales of production. Industrialists, comfortable with their relative security within the domestic market, became disinterested in export opportunities.¹⁸ Problems had also developed in the cattle industry at the time of the economic crisis. Traditional landowners had failed to invest in pasture improvements. Little incentive had been given to improve their land. The government made minimal attempts to supply technical assistance or credit to improve pastures. Production in the cattle industry reached levels of stagnation.¹⁹ As a result, New Zealand and Australia began offer stiff competition to Uruguayan exports of meat and wool.²⁰ Decreases in exports from the livestock industry had also been affected by increased domestic consumption. Between 1935-44, 50-60% of cattle production was being exported, but between 1955-60, the exports had dropped to 30%.²¹

During the second half of the 1950s, the annual production growth rate fell to 0.8%. Two related factors are to blame for the economic crisis of the mid-century in Uruguay. Performance of the export economy declined and with it, the growth of industry. By the mid 1950s, import-substitution industrialization had reached certain limits. “So long as further industrial growth depended on the establishment of new and still higher cost industries rather than the expansion of existing industries, the process of industrial growth was bound to end.”²² The decline in exports and the decreases industrial growth led to a general stagnation of the economy. This in turn thwarted the Colorado’s welfare state. The system that had long prevented union militancy had decayed, and what ensued was a decade and a half of worker discontent and civil unrest that the Uruguayan government was hard-pressed to quell.

From 1956-72 the Gross Domestic Product declined 12%. Real salaries decreased and the public employees were hit the hardest with a 40% decline in their real wages.²³ People on retirement and old age pensions suffered substantial losses in their buying power as their real income dropped 47.9% in 1970 from its 1963 level.²⁴ In addition, inflation continued to rise, reaching its zenith in June of 1968 when the level of price increase was at 170%.²⁵ Foreign loans indebted the country, reaching a height of 480 million dollars by 1965. Payments became difficult to make as the country’s reserves were nearly exhausted.²⁶ The levels of emigration from Uruguay help demonstrate the extent of the crisis and the pessimism many experienced regarding the economy’s recuperation. Emigration began increasing in 1963 but reached dramatic proportions in 1970 when 8.5% of the 1963 population (or nearly 220,000 people) left the country.²⁷ The 1970 migration out of Uruguay came at around the time repression from the executive branch had increased and the economic crisis had worsened.

The economic crisis mobilized preexisting unions to protest the drop in their real incomes. At the same time labor unions began to be organized in sectors of the industry where none had previously existed, particularly among white-collar workers. A considerable increase in militancy came from public employees as their wages suffered the most. During the 1960s, the Communist Party began to gain leadership of the labor unions.²⁸ Estimates during the 1950s indicated that 1,200,000 man-days of labor were lost yearly to strikes. In 1963 that number rose to 2,500,000.²⁹ The Convención National de Trabajadores (CNT) was formed in 1966 as a nationwide coalition of many labor unions. The organization attempted to cut across ideological and class divisions, and succeeded to a great extent.³⁰

The more threatened the elite felt by labor unions, the more they advocated military takeover. The landowners, for example, were generally non-supportive, while industrialists, who stood in the heat of the labor union battle were strong advocates of the military regime.³¹ Many felt their personal safety was threatened in lieu of the kidnappings performed by guerrillas then at large in the capital. The union movement pushed industrialists to become more politicized that heretofore had been. In 1968 President Pacheco Areco appointed a cabinet composed of entrepreneurs, landowners, bankers, and lawyers who represented foreign interests. Following those appointments, the government began enacting repressive measures against labor unions.³² Around this period of time, industrialists also began to build alliances with the military, especially with the officers. It has been suggested that the coup came as an answer to the needs of industrialists.³³ Labor union militancy had the effect of driving industrialists to political action, which in turn posed a threat to democracy.

One labor movement that would later return to haunt the nation with blood and defiance began in the northern provinces of Salto and Artigas. Sugarcane and sugar beet workers there unionized in 1961, demanding better working conditions and land reform. Led by Raúl Sendic, the union traveled to Montevideo to voice their demands. They found the Uruguayan government apathetic to their cause; arrests and shootings followed their protests. After his release from prison, Sendic and his associates, including a group of peasants, began the Tupamaro National Liberation Movement. Their experiences at the capital city were a strong indication to them that the legal avenues of reform and social justice were closed. They believed the existing system only favored the wealthy landholders.³⁴ Justifying their use of armed resistance as a means of reform they later wrote, “we have placed ourselves outside the law . . . because that is the only honest attitude to be taken when the law is not equal to everybody; when the law is here to defend the spurious interests of a minority that damage those of the majority.”³⁵

The name that this socialist insurgent group appropriated, Tupamaro, became symbolic of the nationalistic ideology they adopted. The origin of the name “Tupamaro” came from an Incan rebel named Tupac Amarú who fought for the freedom of his people from Spanish rule from 1780-81. Following his defeat and execution, the Spaniards began naming any insurgent group Tupamaros, including José Gervasio Artigas, Uruguay’s father of independence.³⁶ By identifying with the national hero in name, the guerrillas demonstrated aims of independence from other nations and social reform for Uruguay.

The Tupamaros believed that many of the economic conditions then present in Uruguay were the result of capitalism’s inherent problems. They believed that the “capitalists” or industrialists and landowners had enriched themselves at the expense of the rest of society even during times of economic struggle. As these elite people of business also held control over the government, they believed that legal avenues could never achieve measures of justice such as land and wealth redistribution. Another area of blame was the political and economic dependency of Uruguay on the more industrialized countries. These foreign powers also impeded the progress of social reform and could not be overruled without armed resistance.³⁷

The guerrillas sought, through violence and political kidnapping, to discredit the power of the government, the police, and the armed forces. In so doing they expected to create in the eyes of the masses a “parallel government,” one that the people could flock to, or reject, joining the official State for a final confrontation. The Tupamaros expected to lead the masses that sought reform in a final overthrow of the Uruguayan government and the installation of a new progressive regime.³⁸

The guerrilla movement was composed of a wide variety of individuals from many different economic classes, almost exclusively of Uruguayan citizenship, further indicating a strong nationalist ideology.³⁹ The Tupamaros have been called the “brazo armado” of the Socialist Party.⁴⁰ They counted on the support of segments of the leftist parties, lower officials of the Catholic Church, and were strongly tied to labor unions. Their actions were meant to complement the work of the unions as they once explained: “It is not the same thing to attack the state that is in the plentitude of strength as to attack a state that is semiparalyzed by strikers.”⁴¹

For the 1971 elections, the Left consolidated their voting power into the Frente Amplio Party. Disgruntled Colorados and Blancos joined the movement along with Christian Democrats, and of course both the Socialist and Communist Parties. The coalition included both working-class and white-collar individuals.⁴² The Frente Amplio created a political mobilization previously unheard of in Uruguay, which was broad in size and deep in zeal. Their activities included mass propagandizing and the organization of committees of support both in neighborhoods and in workplaces.⁴³ Even the Tupamaros temporarily ceased their armed struggle to aid the newly formed party.⁴⁴

By the early 1960s the forces demanding reform had been marshaled mostly by the leftist parties. They included the labor movement, the combined political strength found in the Frente Amplio Party, and urban guerrillas such as the Tupamaros.⁴⁵ The Right in turn reacted to the consolidation and militancy of the Left. Uruguayan society thus became increasingly polarized, further threatening order.

The massive activity of the Left prompted many of the staunch rightists to cry for “la mano dura”⁴⁶ from the government in dealing with the “communists.” The government at that time had been preying upon the fears of many people, especially those of the middle class, circulating reports of Soviet tanks roaming the streets of Montevideo and kidnapped children being shipped to Russia.⁴⁷ Indeed the power of the Frente Amplio in the 1971 elections caused a significant amount of concern among the military and business circles.⁴⁸

In 1960 the Movimiento para la Defensa de la Libertad moved against the Left. Their declared purpose was the destruction of Communism. Their means included denunciations of communism, active propagandizing against leftists, and armed violence.⁴⁹ Following an “anti-fidelista”⁵⁰ demonstration in the Plaza Independencia they attacked the local offices of both the Communist and Socialist Parties. Many died and others were wounded. Authorities detained no one from the movement.⁵¹

The 1971 election saw even greater polarization within society. The Juventud Uruguaya en Pie (JUP), an extreme rightest group, organized demonstrations that were followed by attacks against offices of the Frente Amplio.⁵² The JUP’s self-assumed responsibility was to punish families of alleged Tupamaros, as well as assaulting juveniles suspected of aiding the terrorists. A similar group called the Comando Caza Tupamaros went to the extreme of murdering suspected guerrillas. Both groups were allegedly created with the full backing of higher government who provided weapons, training, and financial support.⁵³ It must have been a peculiar sight when just two days before elections both the Colorado and Blanco Parties, traditional rivals, joined in a large demonstration in “defense of democracy,” campaigning against the combined Left.⁵⁴

The election of 1971 yielded amazing results. The Frente Amplio gained 30% of the votes in Montevideo, the heart of leftist guerrilla, labor, and political campaigns. Sadly, it did not do as well in the countryside.⁵⁵ The total votes the party accrued came to 18.3%, which was nearly half of the votes gained by either the Colorado or Blanco Party.⁵⁶ Strong evidence, however, indicates that there was mass fraud involved in the election. In many districts more votes were counted than there were registered voters, and some bags of ballots were later found to have been stolen. One estimate has argued that President Bordaberry, the alleged winner of the election, received 35,000 extra votes, more than twice over the voting margin.⁵⁷

Before the 1971 election certain events had already caused the Uruguayan armed forces to become more of a political institution than a military one. The ideology that permitted such a shift had originated long before in certain sections of the United States government. Following the Second World War, the U.S. emerged from its isolationist policies in reaction to the beginning of the Cold War.⁵⁸ Its new protocol would include the U.S. spearheading a coalition of allied nations, democratic or not, who would strive to achieve liberty. Any nation that did not support United States interests would be seen as enemies, harboring “[el] expansionismo solviético y sus agentes internos.”⁵⁹

In 1948, the Carta de la Organización de Estados Americanos was signed in Bogotá, Columbia and represented the first anticommunist manifesto. American nations pledged to provide for the “preservation and defense of democracy in America.” Around the time of the convention, the U.S. began its Military Assistance Program, which included the training of armed forces and the providing of equipment, with the stipulation that the beneficiaries promote United States’ objectives.⁶⁰ An idea emerged from the United States called the Doctrine of National Security, which was imparted to Latin American countries and their militaries. This doctrine argued that the armed forces were responsible not only for external but also for internal security. The military was to root out all traitors to the nation, namely, insurgents.⁶¹ It has been pointed out that the said doctrine unfortunately sacrifices liberty in name of security.⁶² The Uruguayan military, years after their seizure of power would publicly admit indoctrination by the tenants of national security and that prior to the coup, “ya entonces contaban con el conocimiento teórico, y que soló les faltaba aplicarlo.”⁶³

The United States provided extensive military and police training as well as provisions for Uruguayan forces. By 1971, over 800 Uruguayan policemen had been educated in their native country and in the U.S, and 1.936 million dollars given in police aid.⁶⁴ The military benefited no less from U.S. programs. By the same year, the armed forces had 1,591 of their troops trained by the United States and deliveries of military assistance and excess defense articles reached 45.94 million dollars. U.S. military sales of equipment to the country totaled 3.93 million dollars.⁶⁵

The CIA was responsible for many of the classes that taught to police forces the methods of intelligence gathering and torture. One meeting featured a live session with one woman and three men being held as political prisoners. Methods of torture were demonstrated on the subjects, including the use of chemicals and electrocution. All four died during the exercise.⁶⁶ When the military coup occurred, many of those trained by the U.S. had attained very important positions.

The CIA also set up many organizations whose members organized death squads, which began to operate between 1970-71, and conducted tortures.⁶⁷ One death squad the intelligence agency helped create received its guidance from the Uruguay’s Minister of the Interior, and obtained support from the local police department. Their activities included bombings and kidnappings of Tupamaro sympathizers.⁶⁸

It has been pointed out that the police’s violation of human rights that occurred in Uruguay was a repetition of what they had learned in training classes.⁶⁹ By extension, it should also be stated that the acts of military forces in appropriating rule of the country was a repetition and application of methods and ideologies learned under the United State’s capable tutelage.

A series of government policies aided the deterioration of democracy. In 1966 a constitutional reform revoked the collegial presidency, returning executive power to one elected individual for a five-year term. The change came due to the growing criticism of the failures of the committee presidency.⁷⁰ In 1967, President Gestido died and his vice-president, Jorge Pacheco Areco gained the presidency. One week after taking office Pacheco banned six minor leftist parties for their supposed ties to the guerrillas. This act was the first time any party had been banned in the history of Uruguay. Pacheco closed two leftist newspapers unconstitutionally, as no power is given to the executive branch to take any such action.

In 1968 Uruguay’s situation worsened economically and consequently, politically. Inflation reached 10% per month, and to slow its pace, Pacheco declared a price and wage freeze. In order to curb anticipated labor strikes, he declared a state of emergency.⁷¹ A strike of bank tellers erupted and using his executive powers, Pacheco banned all strikes then drafted those protesters into the military. Trade union leaders were arrested and the unions oppressed. From that time on, Pacheco and Bordaberry, his successor, used the emergency executive powers on a continual basis.⁷²

The CNT saw Pacheco’s wage freeze as a means to perpetuate their low real wages and strikes continued. More strikers were drafted or arrested.⁷³ As the police were seen as unable to control the labor or guerrilla movements, the military’s budget increased from 13.9% of the government’s budget in 1968 to 26.2% in 1973. Military officers became disillusioned with ineffective civilian leadership in resolving the crisis and so became more politicized. “In a few short years, the Uruguayan armed forces—heretofore the least interventionalist in Latin America—became the dominant force in the nation’s political system.” It happened at a time when the legislative and executive branches were in great conflict.⁷⁴ Tensions between the two had heightened in 1971 when Congress lifted Pacheco’s state of emergency. The president, in defiance, immediately reinstated them. The House of Representatives began the process of impeachment, though it was never completed.⁷⁵

The military should by no means be seen as monolithic in regard to their enlarged role in national politics. While many officers were pleased by their increased politicization, many wished to remain apolitical. In 1968, the conflict led to the resignation of General Liber Seregni, commander-in-chief of the armed forces in Montevideo, who disapproved of the government’s use of his men. Seregni in 1971 ran as the presidential candidate of the Frente Ampio Party.⁷⁶

A surge in Tupamaro action caused Pacheco to censor the media from using words having to do with the guerrilla movement. Newspapers began calling them “the nameless ones.” Between 1971-72, Tupamaro activity reached its peak and the military was placed in control of law enforcement. Following Bordaberry’s inauguration, guerrilla attacks were countered by the government’s declaration of a “state of internal war.”⁷⁷ The military, unrestrained by citizens’ civil freedoms, only needed three months to annihilate the Tupamaros.⁷⁸ By the end of 1972, the famed guerrilla movement was destroyed, with thousands imprisoned.⁷⁹

Accusations of torture led the legislature to propose an investigation of the military’s activities during the campaign against the Tupamaros. In reaction to this, 559 officers united and issued a declaration stating that any move to defame them and their fight against subversion would constitute complicity with the insurgents.⁸⁰ The military became increasingly more defiant of civilian authority. In February 1973, the armed forces refused to recognize the appointment of a new Minister of Defense as he was “de espaldas” toward the military’s “misiones específicas de seguridad nacional y a los intereses de la nación.”⁸¹ In spite of the Tupamaro movement’s destruction, there was an impending and seemingly unalterable movement toward a government of strong authoritarianism. The military established the Consejo de Seguridad Nacional, which was a council, headed mostly by the military that was to supervise all major government policies, effectively replacing the legislative and executive powers.⁸² Congress was closed as it had allegedly been infiltrated by Marxists and labor union restrictions were enacted for the same reason. Military courts took on the responsibility to prosecute insurgents.⁸³ Following the “soft coup” as it came to be known, Bordaberry declared that the Uruguayan crisis was over and “la patria ha triunfado en otra dura prueba.”⁸⁴

Eleven years of repressive military rule followed. Civil liberties were curtailed, media was censored, labor unions prohibited, most political parties were banned, many civilians were imprisoned, and the economy worsened.⁸⁵ In 1974 the economy was entrusted to the “Chicago School” of economics in order to halt inflation and bring in more foreign investment. The working-class suffered the most from these measures as their real income fell 30% between 1973-79.⁸⁶ Conditions existing before the coup persisted but order was ensured through force. Among the military’s attempts at repairing the economy, instituted policies included redistribution of land, abolishment of private monopolies, reorganized of a more equal tax system, cancellation of Uruguay’s foreign debt, and the reorganization of the country’s banking system.⁸⁷

Strong evidence reveals that the military, to a large extent, used the Tupamaro threat as a pretense to appropriate Uruguay’s government. A chronology of events indicates that the guerrilla movement was destroyed in 1972 and the coup occurred in February of 1973. Prior to two massive Tupamaro prison escapes in 1971, the police discovered and ignored tunneling equipment in sewers later used in the prison breaks. It has been suggested that the prisoners were allowed to escape to perpetuate the guerrilla threat and the state of siege.⁸⁸ As has been stated, it was during the surge of Tupamaro activity in 1971-72 that the military was given full authority, under the state of internal war, to destroy the guerilla movement.

The military had many other causes to take over the government. An examination has been made into their acceptance of the Doctrine of National Security as presented by segments of the United States government and military. Surprisingly, the Tupamaros inadvertently had a considerable influence on the military’s perspective of the economy and national politics. The guerrilla’s activities had included the “liberating” of documents proving fraud and corruption of people in elite circles.⁸⁹ During interrogations, the military was given much proof that corruption was widespread among the country’s influential people. “In the end a number of the more nationalist-minded and younger military officers probably realized that there was much more in common between them and the Tupamaros than between either of them and many traditional politicians.” The armed forces began a series of arrests including many distinguished politicians and business-people.⁹⁰

The economic crisis that began in the mid-century created social tensions as incomes and the welfare system declined. These tensions took the form of the extensive labor movements that followed. Leftists led the labor unions and mobilized political action in favor of reform. At the same time, some reformists took a more extreme measure, resorting to violence to promote change. Society became polarized as the conservative segments of Uruguay reacted to the consolidation of the Left, at times in equally violent ways. The executive office issued decrees that began the oppression of freedom and politicized the armed forces. The military, trained in the Doctrine of National Security generally welcomed the opportunity to intervene in the country’s crisis. They accepted the role of controlling internal and external security, and following the coup, sought to improve the economy and politics without the inhibitions of inefficient civilian leadership. Disillusioned with civilian authority, the military usurped it, completing the decay of democracy in Uruguay.

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