1940: Uruguay

The defense policy of the Baldomir administration outlined to the Chamber of Deputies on Nov. 17 was unanimously endorsed by the Cabinet on the closing day of the year, and full support was given to agreements concluded with Argentina for the construction of Plata River bases and the pooling of the defense forces of the two countries. The withdrawal of opposition followed an unusually acrid debate attended with violence. This marks the beginning of a political truce between the government and the Nationalist or Blanco Herrerista Party, led by Luis Alberto Herrera. The Herreristas, taking an isolationist position in the Senate and in Sr. Herrera's newspaper, had caused three Cabinet crises in recent months over the question of establishing Pan American naval and air bases on Uruguayan soil, but the President stood firm in his policy of cooperation on continental defense. On Dec. 29 the government published a decree creating a military commission to draw up plans for and supervise the construction of an air base, for which a preliminary appropriation of about $1,000,000 was made in September. This is the first base to be undertaken by any South American country as a result of defense conversations begun by the United States Government in June. The Uruguayan Congress has also passed a bill providing for compulsory military service. This measure is contrary to President Alfredo Baldomir's campaign promise, but the world situation has changed the prevailing attitude towards conscription. The incident of the Graf Spec has brought the European War nearer to Uruguay than to any other Latin American country.

Whether or not the alleged Fascist leanings of Sr. Herrera are true, the controversy over bases determined the President to hasten a revision of the Constitution, which creates an unworkable deadlock between the Executive and a hostile or uncooperative legislature. According to the 1934 basic law, the Senate, composed of thirty members, derives half of its number from each of the two parties polling most votes in the presidential elections. This gives the opposition the same representation as the administration party, even though in this case it controlled only one-third of the nation's votes in the last election. Moreover, the three Cabinet members to which the opposition is constitutionally entitled are directly responsible to the Herrerista bloc in Congress. Naturally the Blanco Herreristas are opposed to constitutional reform, and final reconciliation with the government over the 'bases' question may spell compromise on this matter.

On the charge of a military plot to seize Uruguay and turn it into an agricultural colony of the Reich, twelve Nazis were arrested in June, following a Congressional investigation of Nazi activities in the Republic, especially in the provinces close to Brazil. During the course of this investigation the National Socialist organization and the German Labor Front in Uruguay were voluntarily dissolved. In September, eight of the Nazis, who had been released under German pressure, were reindicted, to be tried before the Supreme Court, and a long denunciation of the National Socialist Party in Uruguay was published. The joint stand taken at Havana (see CVBA) against 'subversive activities' has strengthened the hand of the government in its anti-Nazi policy. A reaffirmation of faith in democracy was stressed in the celebration Aug. 25 of Uruguay's 115th anniversary of independence.

The Republic's trade problems and its commercial and financial relations with the United States parallel closely those of Argentina (see ARGENTINA). Its products, agricultural and pastoral, are largely competitive with those of the United States, which accounts for the failure to negotiate a reciprocal trade pact. President Baldomir has pointed out that though bilateralism in international trade is unsatisfactory, Uruguay's trade has, of necessity, been on the bilateral basis forced on it by its best customers in Europe, since the United States does not buy enough to create the dollar exchange needed to cover Uruguayan imports from the United States. Although the loss of the German market has greatly affected the Republic's trade position, this has been offset by higher prices and a greater demand for Uruguayan goods on the part of Great Britain, the United States and Japan, so that figures for the first seven months of 1940 showed a satisfactory trend regarding dollar exchange and export surplus. (Total exports indicated an increase of 7.9 per cent in value over the corresponding period in 1939. The share of the United States in the country's imports was 11 per cent; shipments to the United States represented 13 per cent of total exports). On Dec. 11 announcement was made of a loan of $7,500,000 from the Export-Import Bank, which includes an earlier credit of $4,000,000, to be used to finance purchase of war materials and government loans to private enterprise. Ratification of a trade treaty with Japan, signed in 1934 but not ratified earlier because of the internal situation in Uruguay, was announced by the Japanese government in May. At the same time that an agreement was reached with Argentina regarding Plata River bases, accord was reached on commercial relations, which is expected to lay the foundation for a future economic agreement similar to that concluded between Argentina and Brazil.

A regional conference of the Plata River countries (Brazil, Bolivia, Paraguay, Argentina and Uruguay), scheduled for August, is to be held in Montevideo on Jan. 15, 1941. The Bolivian Foreign Minister has been most instrumental in organizing this conference, possibly with an eye to getting Colonia (in Uruguay, directly across the Plata River from Buenos Aires) established as a free port, a move which would be a great advantage to both Bolivia and Paraguay. See also FASCISM.