463. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Mann) to Secretary of State Rusk 1

SUBJECT

  • Uruguayan Situation Report

Last June we called Ambassador Coerr on consultation because we were becoming increasingly concerned as to what might be done to make the Uruguayan economy and Uruguayan democracy work. Since then we have become even more concerned because the situation has deteriorated further and there have been for the first time in many years rumors of serious unrest in the Uruguayan military and the possible threat of a military coup. We hear that both Argentina and Brazil are also concerned over the situation in Uruguay and in fact that certain of the Brazilian military might be in favor of a coup should Uruguay fail to restrict the activities of Brazilian exiles (including former President Goulart and his brother-in-law, ex-Governor Brizola) now in Uruguay.

Factors leading to this serious situation are: the growth rate in recent years has been almost zero; the inflation rate has reached between 40 and 50% and the budget deficit is large and growing; Uruguay’s foreign exchange position is becoming precarious and wool exporters are pricing themselves out of the market. At the same time the nine-man collegium Executive is having great difficulty in reaching decisions and implementing them and the parties which elected them to power are fragmented and virtually leaderless after the death or absence from the scene of four of the leading politicians. Although the Uruguayan Development Council has come up with an excellent diagnosis of the country’s problems and what should be done about them, the government has not as yet taken the corrective action. Both our Ambassador and the Uruguayan Ambassador here believe that the measures necessary to improve the situation can only be taken by the Uruguayans themselves.

As a result of our concern, we telegraphed to Ambassador Coerr on November 252 and his reply is contained in Tab A.3 In effect he confirms the deteriorating situation and points out that there seemed to [Page 975]be two alternatives: (1) either a change by a coup or (2) a constitutional change on a basis which would provide an opportunity for the two traditional political parties to work more closely together on the country’s problems.

We agree with the Ambassador that a constitutional solution is the one which we should hope for and support. The military who have been mentioned as possible leaders of a coup are not qualified and probably would not have any significant civilian support. They would be opposed strongly by the well-organized Communists and a takeover by incompetent military could degenerate into further chaos and advantages for the Communists. On the other hand, constitutional reform will be slow and the situation may become so bad that those favoring constitutional reforms will not have time to bring them about. The Embassy points out, however, that the increasing political and economic pressures on the government and the increased rumors of a coup are bringing the politicians closer together on the need for constitutional reform, and that a solution along these lines is now more probable than heretofore.

The Embassy estimates that a coup is not imminent despite rumors and increased military preoccupation with the country’s problems. The military apparently have decided to meet with the nine-man Executive to impress on that body the need of getting on with the business of government. But, apparently most military do not favor a coup. Unfortunately, we have not seen much to indicate that the government is prepared to take the necessary action and an IMF representative who visited Uruguay last week states that there seems to be no competence nor understanding of economic problems within the upper echelons of government.

A series of strikes, inflation, and the worsening economic situation are increasing disillusionment within all sectors of Uruguay. Despite Uruguay’s reputation as a model democracy, and the general antipathy to a coup within the country, a spark from any of these incidents might touch off a wave of more popular support for a coup.

Our Ambassador has recommended that we start to give more attention to the movements for constitutional reform and judiciously support such movements without identifying ourselves with any particular plan. He also has recommended that he take this line with the new Brazilian Ambassador, and we concur, believing this might be the best channel to get word of our views back to the Brazilian Government and help forestall any move which the Brazilian military might be inclined to make towards supporting a Uruguayan military coup.

I wish you to be informed of this situation because while it might drag on for a long while (and the Uruguayans do have remarkable recuperative power), it also might degenerate fast and we might find a [Page 976]coup taking place. A coup in “model” Uruguay would have many repercussions throughout the hemisphere. Our main problem is that we can do little to help the Uruguayans. They are failing to make democracy work and the remedies lie almost exclusively in their own hands.

I attach as Tab B my reply to Embassy Montevideo’s telegram no. 519.4

  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL 23–9 UR. Secret. Drafted by Hoyt on November 30. A notation on the memorandum indicates that Rusk saw it.
  2. Telegram 278 to Uruguay. (Ibid.)
  3. Telegram 519 from Uruguay, November 29; attached but not printed.
  4. Telegram 284 to Uruguay, November 30; attached but not printed.