611.33/11–1750

Department of State Policy Statement

secret

Uruguay

a. objectives

United States policy objectives in Uruguay are peculiarly catholic. There are no major and few minor problems to complicate the pursuit of continued Uruguayan support for US international objectives, and favorable conditions for US interests in Uruguay. Intermediate objectives are (1) to strengthen existing ties and the feeling of kinship [Page 1013]with the US, (2) the continuance of Uruguay’s high standards of stability and US-type democracy, (3) the rational development of the Uruguayan economy and further improvement of the already relatively high standard of living, and (4) the maintenance of maximum opportunity for private enterprise.

b. policies

Uruguay, as a small nation between two much larger nations—Argentina and Brazil—and as a democratic, socially progressive state, is principally disposed to active, enthusiastic support of the inter-American system and to collaboration with the US as a strategic counterbalance to its neighbors. There is a substantial identity of international objectives between Uruguay and the US. Uruguay, with its reasonably productive pasture and farm land, and its energetic, enterprising people almost entirely of European stock, has the fundamental economic, social, and political conditions necessary for the support of such mutual objectives. It has given this support to the limit of its influence as a small power.

Accordingly, it is our policy to give encouragement and special recognition to Uruguay as an outstanding example of democracy and as a sincere friend to the US. Every appropriate opportunity is utilized to demonstrate publicly this high regard.

We signed with Uruguay in November 1949 the first modern Treaty of Friendship, Commerce and Economic Development between the US and a Latin American nation.1 We seek the restoration of Air Force and Naval Attaché offices in Uruguay as a feature of good will and for representation purposes rather than on the basis of reporting needs. We have agreed to provide an Air Force mission and are now awaiting passage by the Uruguayan Congress of enabling legislation,2 The cultural and informational program is enhanced in Montevideo by an information library, and a cultural convention is being negotiated between the two countries.

It is necessary for us to avoid any action that might lend credence to charges that the United States has allowed its interest in Uruguay to lapse after the war. The United States is thought by some Uruguayans to feel that it no longer greatly needs Uruguay as its friend in the “Rio de la Plata” area, especially since US-Argentine relations have improved materially since 1945. Uruguay is traditionally suspicious of its large neighbors, particularly Argentina, and [Page 1014]desires continuing assurances of support from the US in the event Argentina should attempt to use pressure affecting Uruguay’s sovereignty or economic independence. However, the Uruguayan Government appears reasonably satisfied with assurances given early in 1949 that the US will live up to the spirit as well as the letter of the Rio Treaty of 1947.3

We recognize Argentine influence in Uruguay as natural and understand the large identity of interests between the two nations. Therefore we do not oppose any natural movement toward greater collaboration between the two countries, either economic, cultural, or political.

Uruguay sometimes uses intimations of an Argentine threat in its efforts to obtain US assistance. This has been the case with regard to Uruguayan requests for arms and other assistance concerned with the military establishment. It is our policy to assist Uruguay in order to maintain the US position as Uruguay’s source of arms and to maintain a friendly attitude toward the US among the Uruguayan armed forces. Those forces are not an important factor in the military defense of the hemisphere but they might prove essential to the maintenance of internal order in the event of sabotage or diversionary disturbances in an emergency period.

The present Colorado Party Administration of Uruguay is traditionally and actively friendly toward the US, but the important minority Herrerista Blancos (with a plurality over the dominant faction of the Colorados in the 19464 elections) in the past have been outspokenly anti-American. US policy to maintain a friendly attitude and an open mind with regard to the Herreristas apparently has helped to produce recent indications of a shift in Herrerista policy. In the event they should obtain the responsibility of power in the 1950 elections, they are expected to be much more cooperative toward the US than they now appear. Their anti-US fulminations have been largely the manifestations of an “opposition” party which feels compelled to attack the administration on any vulnerable point; so-called US “imperialism” is a popular target for opposition parties in Uruguay as throughout Latin America.

We further pursue our objectives toward Uruguay through various measures of material assistance. The Institute of Inter-American Affairs maintains a mission engaging in a cooperative program with Uruguay in health and sanitation. The US is disposed to increase this [Page 1015]technical assistance and that rendered through travel grants and scholarships to students and technicians, by an IIAA cooperative program in food and agriculture if US funds become available as expected and if Uruguay makes a definite request following current tentative expressions of interest.

The Export-Import Bank has extended credits to Uruguay for the completion of a major hydroelectric project as well as several private exporters credits. Uruguay has obtained a loan from the International Bank for Reconstruction and Development for further development of its hydroelectric facilities and telephone system.5 The US supports the loan application and is entirely sympathetic to financial assistance for such unquestionably suitable industrialization and for general development, especially the rationalization and improvement of agriculture and livestock raising. Any requests for US financial assistance will, of course, be considered according to the criteria of economic justification and the availability of private capital.

The US endeavors to avoid measures which might be construed as encouraging further steps in Uruguay’s long-term trend toward the government ownership of basic industries. It is recognized, however, that the early development of social legislation has been one of the principal factors in Uruguayan progress and that the entry of governments into industry has been justified at least in part by the scarcity of private venture capital.

Uruguayan policy in this regard also is evident in certain controls of trade in industries where US investment is relatively heavy. Competition in petroleum distribution is restricted by requirements of the official refining monopoly ANCAP. Foreign meat packers have their markets similarly restricted. While we do not oppose participation in these markets by government-owned agencies, we urge that competitive conditions be maintained at the maximum compatible with the fundamental Uruguayan policy to maintain an essential measure of national “economic independence” or economic auto-determination.

There is some indication that Uruguay’s policy in this regard has been modified in the last two years at least to the extent that further controls and restrictions may not be imposed. For example, there seems at present to be no reason for the concern felt in 1947 and 1948 [Page 1016]about the possible entry of government into competition with the private and US-owned cement industry. This new trend is evident in certain provisions of the FCED Treaty with the US, as yet unratified by Uruguay.

Another direct step to obtain continued favorable conditions for US interests in Uruguay was the successful negotiation in 1949 for the mutual reduction of tariffs and for Uruguayan accession to the General Agreement on Tariffs and Trade (GATT).6 However, Uruguay has not yet acceded to the Agreement. It is hoped that accession will cause Uruguay to alter the post-war trend toward measures fostering bilateral trade balancing. The US recognizes these measures as temporary expedients and continues to encourage trade on a multilateral basis consistent with the principles of GATT.

Two double taxation treaties and a cultural convention are now being negotiated between the two governments.

c. relations with other states

The Uruguayan economy is closely related to that of Argentina. Uruguay’s production of basic commodities competes with that of Argentina in the same world markets; although, because of the much greater volume of Argentine production, Uruguay’s exports are not a controlling factor in those markets. Uruguay, in this sense, is dependent on Argentina; the prices which Uruguay receives for its meat, for example, are determined usually by the prices set for Argentine meat.

As a natural consequence, and perhaps also because of Argentine aspirations, the political life of Uruguay is influenced by apprehension concerning Argentine intentions and the desire to keep pace with Argentine economic development. Despite the historical Argentine conviction that it is the economic and political leader of the austral nations of this hemisphere and despite reported Argentine aspirations to increase its hegemony in Uruguay, there has been found no concrete evidence of any Argentine action inconsistent with Uruguayan sovereignty or with US objectives in the hemisphere and the world.

Argentine-Uruguayan relations are complicated by the machinations of the Herrerista Blancos who are alleged to be in conspiracy with the Perón Administration of Argentina. It seems likely, however, that the day has long since passed when any responsible Uruguayan would seriously consider or at least dare to propose political union with the “Western Provinces of the Rio de la Plata.” This maneuvering, therefore, appears to be largely for domestic political consumption.

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There is still latent some slight suspicion of Brazil but more important is Brazil’s value to Uruguay in bolstering Uruguayan independence of Argentina. Brazil, on the other hand, considers Uruguay as a buffer against possible Argentine expansion, which in part explains its cooperative attitude toward Uruguay and its apparent encouragement of Uruguayan suspicion of Argentina.

Uruguay theoretically maintains diplomatic relations with Russia, but there has been no Uruguayan representation in the Soviet Union since late 1947 although the USSR maintains a Legation in Montevideo. The Communist Party of Uruguay reached a high point in the elections of 1946 when it increased its voting strength almost twofold to 5% of the total vote. Subsequently, however, its position has been weakened, for the most part as a result of the current “limited” world war. Furthermore, in the last two years there has been an awakening in Uruguay to the extent to which the Communist Party has controlled Uruguayan labor unions, particularly the one labor federation. As a result there has been an offensive against this position with a consequent weakening of Communist control of that federation and some of its affiliates. However, the Communists, although numerically small, still have a strong and effective organization and through their control of workers engaged in vital industries might be able to pose a serious problem for the Uruguayan Government in the event of an emergency.

Uruguay’s diplomatic relations with Paraguay were normalized in 1949 after a two year interregnum during which they were strained, largely as a result of Uruguay’s interference on behalf of the rebels in the unsuccessful 1947 rebellion in Paraguay.

Uruguay’s relationship with the United Kingdom, based principally on a healthy trade, has returned to something near its pre-war status. Uruguay endeavors to balance its trade with Britain, as with other countries, on a current basis.

d. policy evaluation

The US has been and is largely successful in obtaining the support of the Government and people of Uruguay for its objectives in the hemisphere and the world. There has been thoroughgoing cooperation between our two countries in the United Nations and the Organization of American States although the Uruguayan attitude sometimes is unrealistic. The notable identity of interest between Uruguay and the US and their consistently friendly relations have had special reciprocal advantages. These relations have reassured Uruguay and, from our viewpoint, have given emphasis to the kind of political freedom which leads to a close and effective cooperative relationship between the US and another American republic.

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Likewise relative success appears to have resulted from US efforts to obtain a continuance and even furtherance of economic development and favorable conditions for US private enterprise in Uruguay. Proof of such success, however, must be found principally in the ratification and implementation of the Friendship, Commerce and Economic Development Treaty.

  1. Signed at Montevideo November 23, 1949. The U.S. Senate gave its advice and consent to ratification August 9, 1950. The Uruguayan Parliament has not approved the treaty, which has therefore not gone into effect. For further information, see Foreign Relations, 1949, vol. ii, pp. 780 ff.
  2. The agreement relating to the appointment of officers and subordinate personnel to constitute an Air Force Mission to Uruguay was signed at Washington on December 4, 1951. For text, see United States Treaties and Other International Agreements(UST), vol. 2 (pt. 2), p. 2517.
  3. For text of the Inter-American Treaty of Reciprocal Assistance, which entered into force for the United States on December 3, 1948, see Department of State Treaties and Other International Acts Series (TIAS) No. 1838, or 62 Stat. (pt. 2) 1681.
  4. Between “1946” and “elections,” the words “and 1950” are written in by hand.
  5. On August 25, 1950, the IBRD had approved a 24-year, 4¼ percent loan of $33 million to the government-owned Administración General de las Usinas Eléctricas y los Teléfonos del Estado. In telegram 32 to Montevideo, August 17, marked “For Ambassador from Miller,” the latter had stated in part that the loan agreement had been reached after prolonged and difficult negotiations, which had been conducted on the Uruguayan side by Ambassador Alberto Domínguez Cámpora. “Bank has given in on at least sixty points to him and Eugene Black [President of the IBRD] tells me it is the most lenient form of contract that the Bank has offered to any country.” (833.10/6–850) File 833.10 for 1950 contains additional documents on the loan negotiations.
  6. For the text of the General Agreement on Tariffs and Trade, concluded at Geneva on October 30, 1947, see TIAS No. 1700, or 61 Stat. (pts. 5 and 6).