Updated April 15, 2019
Uruguay: An Overview
Uruguay, a small nation of 3.5 million people, is located on
controversial domestically. The coalition has positioned
the Atlantic coast of South America between Brazil and
Uruguay on the leading edge of lesbian, gay, bisexual, and
Argentina. The country stands out in Latin America for its
transgender (LGBT) rights in Latin America by allowing
strong democratic institutions; high per capita income; and
LGBT individuals to serve openly in the military, legalizing
low levels of corruption, poverty, and inequality. Due to its
adoption and marriage for same-sex couples, and granting
domestic success and commitment to international
legal protections and rights to transgender people. Under
engagement, Uruguay plays a more influential role in
the Broad Front, Uruguay also has legalized abortion in the
global affairs than its size might suggest. Successive U.S.
first trimester of pregnancy and become the first country in
Administrations have sought to work with Uruguay to
the world to legalize and regulate every aspect of the
address political and security challenges in the Western
marijuana market, from production to consumption.
Hemisphere and around the world.
Figure 1.Uruguay at a Glance
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
forced into political exile; 3,000-4,000 were imprisoned;
and several hundred were killed or “disappeared.” The
country restored civilian democratic governance in 1985,
and analysts now consider Uruguay to be among the
strongest democracies in the world.
President Tabaré Vázquez of the center-left Broad Front
was inaugurated to a five-year term in March 2015. This is
his second term in office—he previously served as
president from 2005 to 2010—and the third consecutive

Sources: CRS Graphics, Instituto Nacional de Estadística de
term in which the Broad Front holds the presidency and
Uruguay, Pew Research Center, and the International Monetary Fund.
majorities in both houses of the Uruguayan General
Assembly. The coalition holds 50 seats in the 99-member
Chamber of Representatives and 15 seats in the 30-member
President Vázquez has spent much of his second term in
office dealing with economic challenges. Uruguay’s
Senate; Vice President Lucía Topolansky provides the
Broad Front with a 16th vote in the upper chamber.
economic growth slowed to an annual average of 1.7%
Vázquez’s initial election ended 170 years of political
from 2015 to 2018, depressed by recessions in Argentina
domination by the National and Colorado parties.
and Brazil—two of Uruguay’s top trading partners and
fellow members of the Common Market of the South
The Broad Front governments have maintained orthodox
(Mercosur) customs union. The economic slowdown has
macroeconomic policies while gradually expanding social
contributed to higher levels of unemployment, depressed
welfare programs, establishing a more progressive tax
revenue collection, and larger fiscal deficits. In an attempt
system, and implementing union-empowering labor laws.
to stabilize public-debt levels, the Vázquez Administration
This policy mix, combined with a boom in international
enacted a fiscal adjustment that deferred some public
demand for Uruguay’s agricultural commodity exports, has
spending and increased taxes on businesses and higher-
contributed to strong economic growth and considerable
income earners. At the same time, the government has
improvements in living standards. Uruguay is in the midst
sought to bolster economic growth by encouraging
of the longest economic expansion in its history, with real
increased investment in infrastructure through public-
gross domestic product (GDP) growth averaging 4.3% per
private partnerships. While annual budget deficits have
year since 2005 according to the International Monetary
declined slightly, the IMF forecasts that economic growth
Fund (IMF). Government statistics indicate that the poverty
will slow from 2.1% in 2018 to 1.9% in 2019.
rate, which had spiked during a 1999-2002 economic and
financial crisis, fell from 39.9% in 2004 to 8.1% in 2018.
Vázquez has lost much of his popular support over the past
Uruguay’s middle class now encompasses 60% of the
four years. In March 2019, 28% of the population approved
population, making it the largest in Latin America in
of his performance in office while 47% disapproved,
relative terms according to the World Bank.
according to the polling firm Equipos Consultores. Slow
growth has contributed to a sense of economic stagnation,
and the government’s austerity measures have alienated
The Broad Front also has enacted several far-reaching
social policy reforms, some of which have been
Broad Front voters who expected Vázquez to significantly
increase funding for education and other public services.
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Uruguay: An Overview
Many Uruguayans are also alarmed by rising levels of
investment in Uruguay increased from $609 million in 2005
crime and violence. The homicide rate has more than
to $1.6 billion in 2017. According to the U.S. Department
doubled since the Broad Front first took power, rising from
of State’s 2018 Investment Climate Statement, Uruguay
5.7 per 100,000 residents in 2005 to 11.8 per 100,000 in
“recognizes the important role foreign investment plays in
2018. Scandals have further tarnished the Vázquez
economic development and continues to maintain a
government. In 2017, then-Vice President Raúl Sendic
favorable investment climate that does not discriminate
resigned over alleged mismanagement of the state-run oil
against foreign investors.” The State Department notes that
company and misuse of his corporate credit card while
Uruguay is strategically located between Mercosur’s largest
serving in top roles at the company between 2005 and 2015;
economies (Argentina and Brazil) and that the country’s
he is now facing charges of embezzlement of public funds
special import regimes make it a well-situated distribution
and abuse of authority. Given Uruguayans’ discontent with
center for U.S. goods into the region. The State Department
the current situation in the country, the Broad Front may
also asserts that Uruguay’s middle-class consumers make
struggle to hold onto power in presidential and legislative
the country a good test market for U.S. products. About 120
elections scheduled for October 27, 2019.
U.S.-owned companies currently operate in Uruguay.
U.S.-Uruguay Relations
International Affairs
Although some sectors of the Broad Front are ideologically
Uruguay is a strong proponent of democracy and human
opposed to working with the United States, U.S.-Uruguayan
rights, the peaceful resolution of disputes, international law,
relations remain friendly. Over the past 15 years, the
and multilateralism, and it often seeks to advance those
countries have increased trade and investment ties and
values by serving as a consensus builder and mediator in
worked together to address political and security challenges
international institutions. Although Uruguay and the United
in the Western Hemisphere and around the world.
States often seek similar objectives in international affairs,
Uruguayan public opinion toward the United States has
the countries sometimes disagree on tactics. For example,
deteriorated since President Trump took office, however,
the Vázquez Administration has condemned the
with just 17% of Uruguayans approving of U.S. leadership
undemocratic actions of the Venezuelan government but
in 2018, according to Gallup. This could hinder U.S. efforts
has expressed concerns that U.S. and regional efforts to
to conclude bilateral agreements or obtain Uruguayan
pressure Nicolás Maduro could exacerbate polarization
support for U.S. initiatives in the region.
within the country and potentially spark a military
confrontation. Uruguay has backed diplomatic initiatives,
Trade and Investment Relations
such as the International Contact Group, intended to
The United States and Uruguay have sought to forge closer
facilitate a peaceful path toward a free and fair presidential
commercial ties over the past 15 years but have faced some
election. The Trump Administration has called on Uruguay
obstacles. In 2007, during President Vázquez’s first term,
to take a more confrontational stand and recognize Juan
the countries signed a Trade and Investment Framework
Guaidó as the legitimate president of Venezuela.
Agreement (TIFA), which is designed to ensure ongoing
consultations on issues such as trade facilitation, food
Uruguay is one of the largest per capita contributors of
safety, intellectual property rights, trade in services, and
forces globally to U.N. peacekeeping missions. As of
government procurement. Vázquez initially sought to
March 2019, Uruguay had 955 military troops, police, and
negotiate a free trade agreement with the United States but
advisers deployed to seven countries, 935 of whom were
was unable to overcome resistance from leftist sectors of
supporting the U.N. Organization Stabilization Mission in
the Broad Front and fellow members of Mercosur. Vázquez
the Democratic Republic of the Congo. The country also
also withdrew Uruguay from a potential Trade in Services
has established a National Peace Operations Training
Agreement with the United States and more than 20 other
Institute, which provides specialized peacekeeping training
nations in 2015 due to opposition within his coalition.
to Uruguayans and foreign students.
Total U.S.-Uruguay merchandise trade has increased by
The United States has urged Uruguay to maintain its
73% since the TIFA was signed, reaching nearly $2 billion
contributions to U.N. peacekeeping missions and has
in 2018, according to the U.S. Department of Commerce.
sought to strengthen Uruguay’s peacekeeping capabilities.
U.S. exports to Uruguay totaled $1.4 billion and U.S.
Since FY2013, the U.S. government has obligated nearly
imports from Uruguay totaled $509 million, resulting in a
$17.5 million in assistance for Uruguay through the Global
$936 million U.S. trade surplus. Machinery, refined oil
Peace Operations Initiative to provide equipment and
products, pharmaceutical products, cosmetic products, and
training for Uruguayan peacekeepers and support to
medical instruments were the top U.S. exports to Uruguay.
Uruguay’s peacekeeping training center. The United States
Beef, wood, prepared meat, medical instruments, fruit, and
also provides International Military Education and Training
leather were the top U.S. imports from Uruguay. In 2018,
(IMET) aid to Uruguay, focused on strengthening
the United States accounted for 7% of Uruguay’s total trade
Uruguay’s peacekeeping, disaster response, and national
and was Uruguay’s fourth-largest trading partner behind
defense capabilities. IMET appropriations for Uruguay
China (19%), Brazil (17%), and Argentina (9%).
totaled $401,000 in FY2018.
U.S.-Uruguayan investment ties have increased
Peter J. Meyer, Specialist in Latin American Affairs
substantially since the countries signed a bilateral
investment treaty in 2005. According to the Department of
IF10881
Commerce, the accumulated stock of U.S. foreign direct
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Uruguay: An Overview


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https://crsreports.congress.gov | IF10881 · VERSION 3 · UPDATED

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