May 8, 2018
Uruguay: An Overview
Uruguay, a small nation of 3.4 million people, is located on
Figure 1.Uruguay at a Glance
the Atlantic coast of South America between Brazil and
Argentina. The country stands out in Latin America for its
strong democratic institutions; high per capita income; and
low levels of corruption, poverty, and inequality. As a result
of its domestic success and commitment to international
engagement, Uruguay plays a more influential role in
global affairs than its size might suggest. Successive U.S.
administrations have sought to work with Uruguay to
address political and security challenges in the Western
Hemisphere and around the world.
Political and Economic Situation
Uruguay has a long democratic tradition but experienced 12
years of authoritarian rule following a 1973 coup. During

the dictatorship, tens of thousands of Uruguayans were
Sources: CRS Graphics, Instituto Nacional de Estadística de
forced into political exile; 3,000-4,000 were imprisoned;
Uruguay, Pew Research Center, and the International Monetary Fund.
and several hundred were killed or “disappeared.” The
country restored civilian democratic governance in 1985,
The Broad Front also has enacted several far-reaching
and analysts now consider Uruguay to be among the
social policy reforms, some of which have been
strongest democracies in the world.
controversial domestically. The coalition has positioned
Uruguay on the leading edge of lesbian, gay, bisexual, and
President Tabaré Vázquez of the center-left Broad Front
transgender (LGBT) rights in Latin America by allowing
was inaugurated to a five-year term in March 2015. This is
LGBT individuals to serve openly in the military, legalizing
his second term in office—he previously served as
adoption by same-sex couples, allowing individuals to
president from 2005 to 2010—and the third consecutive
change official documents to reflect their gender identities,
term in which the Broad Front holds the presidency and
and legalizing same-sex marriage. Uruguay also has
majorities in both houses of the Uruguayan General
legalized abortion in the first trimester of pregnancy and
Assembly. The coalition holds 50 seats in the 99-member
has become the first country in the world to legalize and
Chamber of Representatives and 15 seats in the 30-member
regulate every aspect of the cannabis market, from
Senate; Vice President Lucía Tuplansky provides the Broad
production to consumption.
Front with a 16th vote in the upper chamber. Vázquez’s
initial election ended 170 years of political domination by
President Vázquez has spent much of his second term in
the center-right National and Colorado parties.
office dealing with economic challenges. Uruguay’s
economic growth slowed to an annual average of 1.6%
The Broad Front governments have maintained orthodox
from 2015 to 2017, depressed by a decline in international
macroeconomic policies while gradually expanding social
commodity prices and recessions in Argentina and Brazil—
welfare programs, establishing a more progressive tax
two of Uruguay’s top trading partners and fellow members
system, and implementing union-empowering labor laws.
of the Common Market of the South (Mercosur) customs
This policy mix, combined with a boom in international
union. The economic slowdown has led to higher levels of
demand for Uruguay’s agricultural commodity exports, has
unemployment, depressed revenue collection, and larger
contributed to strong economic growth and considerable
fiscal deficits. In an attempt to stabilize public-debt levels,
improvements in living standards. According to the
the Vázquez Administration enacted a fiscal adjustment that
International Monetary Fund (IMF) and the International
deferred some public spending and increased taxes on
Labor Organization, respectively, Uruguay’s real gross
businesses and higher-income earners. At the same time,
domestic product (GDP) has grown by an average of 4.5%
the government has sought to boost economic growth by
per year and real wages have increased by nearly 56% since
entering into public-private partnerships and investing
2005. Government statistics indicate that the poverty rate,
$12.5 billion in infrastructure by 2020.
which had spiked during a 1999-2002 economic and
financial crisis, fell from 39.9% in 2004 to 7.9% in 2017.
Although the IMF expects economic growth to accelerate to
Some groups continue to face more challenging
3.4% in 2018, President Vázquez enjoys little popular
circumstances, however, as nearly 17% of Afro-
support. Leftist sectors of the Broad Front have been
Uruguayans remain below the poverty line.
disappointed by the government’s austerity measures and
have pushed the Vázquez Administration to spend more on
education and social assistance programs. Corruption
scandals also have taken a toll on the president’s image. In
https://crsreports.congress.gov

---

Uruguay: An Overview
September 2017, then-Vice President Raúl Sendic resigned
in the United States increased from $88 million to $462
over alleged mismanagement of the state-run oil company
million. According to the U.S. Department of State’s 2017
and misuse of his corporate credit card while serving in top
Investment Climate Statement, Uruguay “recognizes the
roles at the company between 2005 and 2015; he is now
important role foreign investment plays in economic
facing charges of embezzlement of public funds and abuse
development and continues to maintain a favorable
of authority. As of March 2018, local polls indicated that
investment climate that does not discriminate against
about 26% of Uruguayans approved of Vázquez’s job
foreign investors.” The State Department notes that
performance and 49% disapproved.
Uruguay is strategically located between Mercosur’s largest
economies (Argentina and Brazil) and that the country’s
U.S.-Uruguay Relations
special import regimes make it a well-situated distribution
U.S.-Uruguay relations are strong and have grown closer in
center for U.S. goods into the region. The State Department
recent years. Some analysts predicted that bilateral relations
also asserts that Uruguay’s middle-class consumers make
would deteriorate following the Broad Front’s assumption
the country a good test market for U.S. products. About 120
of power, given ideological opposition to working with the
U.S.-owned companies currently operate in Uruguay.
United States by some sectors of the coalition. Those
predictions have not been borne out. Over the past decade,
International Affairs
the United States and Uruguay have forged closer trade and
Uruguay is a strong proponent of democracy and human
investment ties and have worked together to promote
rights, the peaceful resolution of disputes, international law,
international peace and security. President Vázquez has
and multilateralism, and it often seeks to advance those
expressed a desire to continue strengthening relations with
values by serving as a consensus builder and mediator in
the United States. He could face some domestic opposition
international institutions. Although Uruguay and the United
to pursuing closer ties, however, as a 2017 Gallup poll
States often seek similar objectives in international affairs,
found that 69% of Uruguayans disapproved of President
the countries sometimes disagree on tactics. For example,
Trump’s performance in office.
the Vázquez Administration has condemned the
undemocratic actions of the Venezuelan government but
Trade and Investment Relations
views U.S. and regional efforts to isolate Venezuela
The United States and Uruguay have sought to forge closer
diplomatically as counterproductive to fostering a peaceful
commercial ties over the past decade but have faced some
restoration of democracy.
obstacles. In 2007, during President Vázquez’s first term,
the countries signed a Trade and Investment Framework
Uruguay is one of the largest per capita contributors of
Agreement, which is designed to ensure ongoing
forces globally to U.N. peacekeeping missions. Since 1952,
consultations on issues such as trade facilitation, food
more than 45,000 Uruguayans have served under the U.N.
safety, intellectual property rights, trade in services, and
flag. As of March 2018, Uruguay had 935 military troops,
government procurement. Vázquez initially sought to
police, and advisers deployed to five countries, 922 of
negotiate a free-trade agreement with the United States but
whom were supporting the U.N. Organization Stabilization
was unable to overcome resistance from leftist sectors of
Mission in the Democratic Republic of the Congo. The
the Broad Front and fellow members of Mercosur. Vázquez
country also has established a National Peace Operations
also withdrew Uruguay from a potential Trade in Services
Training Institute, which provides specialized peacekeeping
Agreement with the United States and more than 20 other
training to Uruguayans and foreign students.
nations in 2015 due to opposition within his coalition.
The United States has urged Uruguay to maintain its
Total U.S.-Uruguay merchandise trade has increased by
contributions to U.N. peacekeeping missions and has
90% since 2007, according to U.S. Department of
sought to strengthen Uruguay’s peacekeeping capabilities.
Commerce data. In 2017, U.S. exports to Uruguay totaled
Since FY2013, the U.S. government has obligated nearly
$1.6 billion and U.S. imports from Uruguay totaled $585
$16 million in assistance for Uruguay through the Global
million, resulting in a $993 million U.S. trade surplus.
Peace Operations Initiative to provide equipment and
Refined oil products, machinery, cosmetics, video game
training for Uruguayan peacekeepers and support
equipment, and pharmaceutical products were the top U.S.
Uruguay’s peacekeeping training center. The United States
exports to Uruguay. Beef, works of art, wood, medical
also provides International Military Education and Training
instruments, fruit, and leather were the top U.S. imports
(IMET) aid to Uruguay, focused on strengthening
from Uruguay. In 2017, the United States accounted for 8%
Uruguay’s peacekeeping, disaster response, and national
of Uruguay’s total trade and was Uruguay’s fourth-largest
defense capabilities. IMET appropriations for Uruguay
trading partner behind China, Brazil, and Argentina.
totaled $499,000 in FY2016 and $498,000 in FY2017. It is
currently unclear how much security assistance Uruguay
U.S.-Uruguayan investment ties have increased
may receive in FY2018, but the Trump Administration has
substantially since the countries signed a bilateral
requested $300,000 in IMET aid for Uruguay in FY2019.
investment treaty in 2005. According to the Department of
Commerce, the accumulated stock of U.S. foreign direct
Peter J. Meyer, Specialist in Latin American Affairs
investment in Uruguay increased from $609 million in 2005
to $1.5 billion in 2016. During the same time period, the
IF10881
accumulated stock of Uruguayan foreign direct investment

https://crsreports.congress.gov

---

Uruguay: An Overview



Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10881 · VERSION 2 · NEW

---