Updated October 24, 2019
Uruguay: An Overview
Uruguay, a small nation of 3.5 million people, is located on
adoption and marriage for same-sex couples, and granting
the Atlantic coast of South America between Brazil and
legal protections and rights to transgender people. Under
Argentina. The country stands out in Latin America for its
the Broad Front, Uruguay also legalized abortion in the first
strong democratic institutions; high per capita income; and
trimester of pregnancy and become the first country in the
low levels of corruption, poverty, and inequality. Due to its
world to legalize and regulate every aspect of the marijuana
domestic success and commitment to international
market, from production to consumption.
engagement, Uruguay plays a more influential role in
global affairs than its size might suggest. Successive U.S.
Figure 1. Uruguay at a Glance
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
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
Sources: CRS Graphics, Instituto Nacional de Estadística de
was inaugurated to a five-year term in March 2015. This is
Uruguay, Pew Research Center, and the International Monetary Fund.
his second term in office—he previously served as
president from 2005 to 2010—and the third consecutive
President Vázquez has spent much of his second term in
term in which the Broad Front holds the presidency and
office dealing with economic challenges. Uruguay’s
majorities in both houses of the Uruguayan General
economic growth slowed to an annual average of 1.6%
Assembly. Vázquez’s initial election ended 170 years of
from 2015 to 2018, depressed by recessions in Argentina
political 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 budget 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. Nevertheless, the IMF forecasts that
year since 2005 according to the International Monetary
economic growth will slow to 0.4% in 2019.
Fund (IMF). Government statistics indicate that the poverty
rate, which had spiked during a 1999-2002 economic and
Vázquez has lost much of his popular support over the past
financial crisis, fell from 39.9% in 2004 to 8.1% in 2018.
four years. In September 2019, 37% of the population
Uruguay’s middle class now encompasses 60% of the
approved of his performance in office and 47%
population, making it the largest in Latin America in
disapproved, according to the polling firm Cifra. Slow
relative terms according to the World Bank.
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
Broad Front voters who expected Vázquez to increase
social policy reforms, some of which have been
funding for education and other public services. Many
controversial domestically. The coalition has positioned
Uruguayans also are alarmed by rising levels of crime and
Uruguay on the leading edge of lesbian, gay, bisexual, and
violence. The homicide rate has more than doubled since
transgender (LGBT) rights in Latin America by allowing
the Broad Front took power, rising from 5.7 per 100,000
LGBT individuals to serve openly in the military, legalizing
residents in 2005 to 11.8 per 100,000 in 2018.
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Uruguay: An Overview
Given Uruguayans’ current discontent, the Broad Front may
of State’s 2019 Investment Climate Statement, Uruguay
struggle to hold on to power in presidential and legislative
“recognizes the important role foreign investment plays in
elections scheduled for October 27, 2019. Polls suggest the
economic development and continues to maintain a
governing coalition’s candidate, former Mayor of
favorable investment climate that does not discriminate
Montevideo Daniel Martínez, is favored to win a plurality
against foreign investors.” The State Department notes that
of the presidential vote, but his coalition may lose its
Uruguay is strategically located between Mercosur’s largest
majorities in Congress. A second round runoff election,
economies (Argentina and Brazil) and that the country’s
scheduled for November 24, 2019, likely would pit
special import regimes make it a well-situated distribution
Martínez against Senator Luis Lacalle Pou of the center-
center for U.S. goods into the region. The State Department
right National Party. The outcome may depend on Lacalle
also asserts that Uruguay’s middle-class consumers make
Pou’s ability to unite the rest of the political opposition,
the country a good test market for U.S. products. More than
which ranges from the center to the far right. The winner is
120 U.S.-owned companies currently operate in Uruguay.
to be inaugurated in March 2020.
International Affairs
U.S.-Uruguay Relations
Uruguay is a strong proponent of democracy and human
U.S.-Uruguayan relations are generally friendly, though
rights, the peaceful resolution of disputes, international law,
some sectors of the Broad Front distrust the United States,
and multilateralism, and it often seeks to advance those
which provided aid to repressive security forces and sought
values by serving as a consensus builder and mediator in
to undermine the coalition’s electoral prospects during the
international institutions. Although Uruguay and the United
1970s but later supported Uruguay’s return to democracy.
States often seek similar objectives in international affairs,
Uruguayan public opinion toward the United States has
the countries sometimes disagree on tactics.
deteriorated since President Trump took office, with just
17% of Uruguayans approving of U.S. leadership in 2018,
On Venezuela, for example, the Vázquez Administration
according to Gallup. This could hinder U.S. efforts to
has condemned the undemocratic actions of Nicolás
conclude bilateral agreements or obtain Uruguayan support
Maduro and backed diplomatic initiatives, such as the
for U.S. initiatives in the region.
International Contact Group, intended to facilitate a
peaceful path toward a free and fair presidential election. It
Trade and Investment Relations
has opposed U.S.-backed efforts to impose sanctions
The United States and Uruguay have sought to forge closer
against Venezuelan officials, however, expressing concerns
commercial ties over the past 15 years but have faced some
that sanctions could exacerbate polarization within the
obstacles. In 2007, during President Vázquez’s first term,
country and potentially spark a military confrontation.
the countries signed a Trade and Investment Framework
Uruguay’s political opposition has called on Vázquez to
Agreement (TIFA), which is designed to ensure ongoing
take a more forceful stand against the Maduro government.
consultations on issues such as trade facilitation, food
safety, intellectual property rights, trade in services, and
Uruguay is one of the largest per capita contributors of
government procurement. Vázquez initially sought to
forces globally to U.N. peacekeeping missions. As of
negotiate a free trade agreement with the United States but
September 2019, Uruguay had 983 military troops, police,
was unable to overcome resistance from leftist sectors of
and advisers deployed to six missions, 941 of whom were
the Broad Front and fellow members of Mercosur. Vázquez
supporting the U.N. Organization Stabilization Mission in
also withdrew Uruguay from a potential Trade in Services
the Democratic Republic of the Congo. The country also
Agreement with the United States and more than 20 other
has established a National Peace Operations Training
nations in 2015 due to opposition within his coalition.
Institute, which provides specialized peacekeeping training
to Uruguayans and foreign students.
Total U.S.-Uruguay merchandise trade has increased by
73% since the TIFA was signed, reaching nearly $2 billion
The United States has urged Uruguay to maintain its
in 2018, according to the U.S. Department of Commerce.
contributions to U.N. peacekeeping missions and has
U.S. exports to Uruguay totaled $1.4 billion and U.S.
sought to strengthen Uruguay’s peacekeeping capabilities.
imports from Uruguay totaled $509 million, resulting in a
Since FY2013, the U.S. government has obligated nearly
$936 million U.S. trade surplus. Machinery, refined oil
$17.5 million in assistance for Uruguay through the Global
products, pharmaceutical products, cosmetic products, and
Peace Operations Initiative to provide equipment and
medical instruments were the top U.S. exports to Uruguay.
training for Uruguayan peacekeepers and support to
Beef, wood, prepared meat, medical instruments, fruit, and
Uruguay’s peacekeeping training center. The United States
leather were the top U.S. imports from Uruguay. In 2018,
also provides International Military Education and Training
the United States accounted for 7% of Uruguay’s total trade
(IMET) aid to Uruguay, focused on strengthening
and was Uruguay’s fourth-largest trading partner behind
Uruguay’s peacekeeping, disaster response, and national
China (19%), Brazil (17%), and Argentina (9%).
defense capabilities. IMET appropriations for Uruguay
totaled $401,000 in FY2018. FY2019 assistance levels are
U.S.-Uruguayan investment ties have increased
not yet available.
substantially since the countries signed a bilateral
investment treaty in 2005. According to the Department of
Peter J. Meyer, Specialist in Latin American Affairs
Commerce, the accumulated stock of U.S. foreign direct
investment in Uruguay increased from $609 million in 2005
IF10881
to $1.3 billion in 2018. According to the U.S. Department
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Uruguay: An Overview


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https://crsreports.congress.gov | IF10881 · VERSION 4 · UPDATED

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