The Foreign Service Journal, September 2008

S E P T E M B E R 2 0 0 8 / F O R E I G N S E R V I C E J O U R N A L 33 he upcoming presidential election is the talk of the town in Washington these days, but not in my home country. Tucked under Brazil, far from the United States, Uruguay has long been known as the Switzerland of South America. Its 3.4 million people are middle class by world standards, dependent on agricultural exports, and are more inter- ested in what happens in Argentina or Brazil, their clos- est neighbors and biggest trade partners, than in the U.S. Sure, Washington matters. The U.S. government offered a key loan to help Uruguay out of its 2002 financial crisis and, more recently, has become a strate- gic partner at a time of difficulties for Mercosur (the Southern Cone Common Market), an organization comprised of Brazil, Argentina, Paraguay and Uruguay. But while Washington sees Montevideo as a friendly capital in a hostile backyard, the biggest concern for most Uruguayans, and most Latin Americans, is mak- ing ends meet amid rising food and gas prices. Of course, regional governments and business lead- ers have longer-term horizons, worrying about the impact of the U.S. slowdown on their national economies. As the saying goes: “When the United States sneezes, Latin America catches a cold.” Although a U.S. recession could trigger a decline in foreign investment, Uruguay is less dependent on American business in today’s global economy than it used to be. Its exports to the United States fell $75 million in the first five months of this year, a 69 per- cent drop compared to the same period last year, as the country shifted beef sales to Europe. The United States slipped from the No. 1 spot among Uruguay’s export markets to No. 8, with Uruguay importing more from the U.S. market than it sold. U.S. companies such as United Airlines, Texaco and Bank Boston have closed or sold their Uruguayan oper- ations in recent years. Others, including plywood maker Weyerhaeuser, have scaled back. But the coun- try’s economy still grew by more than 7 percent last year, as other businesses — both foreign and local — helped make up the gap. The long-term role of the United States in Uru- guay’s economy remains uncertain. Relations depend on a U.S. economic rebound and on how much Washington agrees to open its market to Uruguayan goods and services, especially sensitive agricultural products. Meanwhile, the country is moving to become more globally competitive and less U.S.- focused. F O C U S O N T H E 2 0 0 8 E L E C T I O N S T RADE I S C ENTRAL FOR U RUGUAY T HE DEBATE IN L ATIN A MERICA IS MAINLY ABOUT WHETHER IT MAKES ANY DIFFERENCE AT ALL WHO MOVES INTO THE W HITE H OUSE IN J ANUARY . B Y L UCÍA B ALDOMIR T Lucía Baldomir is a business reporter for Montevideo’s El País newspaper.

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