LegiStorm

Summary:

Uruguay is a small nation of 3.4 million people located on 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 regional and international affairs than its size might suggest. Uruguay has drawn increased congressional attention in recent years as a result of several high-profile and controversial decisions. Some Members of Congress are tracking the implementation of Uruguay's cannabis-legalization measure as they consider the implications of marijuana-legalization initiatives in a growing number of U.S. states. Uruguay's decision to grant refugee status to six individuals who had been detained at the U.S. Naval Station at Guantanamo Bay, Cuba, in 2014 also has drawn congressional scrutiny. Some Members contend that the Obama Administration failed to ensure that the Uruguayan government would take steps to "substantially mitigate the risk" of the transferred individuals engaging in activities that threaten the United States as required by the National Defense Authorization Act for FY2014 (P.L. 113-66). The Administration disputes that assertion. Domestic Situation The center-left Broad Front (Frente Amplio) coalition has governed Uruguay since 2005, having won the presidency and legislative majorities in three consecutive elections. Since taking office, the coalition has pursued a social democratic policy mix that has combined market-oriented economic policies with progressive taxation, an expansion of the social welfare system, and union-empowering labor reforms. The Broad Front also has enacted several far-reaching social policy changes, legalizing abortion; expanding rights for lesbian, gay, bisexual, and transgender (LGBT) individuals; and legalizing and regulating Uruguay's marijuana market. President Tabaré Vázquez, who began his second nonconsecutive five-year term in March 2015, has spent much of his time in office dealing with Uruguay's deteriorating economic situation. After nearly a decade of strong growth, the Uruguayan economy has slowed dramatically as a result of softening global commodity prices and economic turbulence in Argentina and Brazil—Uruguay's main trading partners and fellow members of the Mercosur customs union. This economic weakness has depressed tax collection and contributed to growing fiscal deficits but has not brought down Uruguay's persistently high inflation. Vázquez has sought to address these economic challenges by reducing expenditures, increasing taxes, holding down wage increases, and investing in infrastructure through public-private partnerships. As economic growth has continued to slow in 2016 to an estimated 0.1%, the Vázquez Administration's approval rating has fallen to 33% and its disapproval rating has risen to 45%. U.S.-Uruguayan Relations U.S.-Uruguayan relations have strengthened over the past decade despite initial expectations by some analysts that ties would deteriorate following the Broad Front's assumption of power. The United States and Uruguay signed a bilateral investment treaty in 2005 and a Trade and Investment Framework Agreement in 2007. In 2015, the stock of U.S. foreign direct investment in Uruguay reached $1.6 billion and bilateral merchandise trade amounted to $1.9 billion. The United States and Uruguay also collaborate on efforts to address international security concerns. Uruguay is serving alongside the United States on the U.N. Security Council for the 2016-2017 term and is one of the largest per capita contributors globally to U.N. peacekeeping missions. The United States has provided more than $14.6 million in assistance to Uruguay over the past four years to bolster the country's peacekeeping capabilities.