1941: Uruguay

The withdrawal, in March, of the three Cabinet members to which the minority Nationalist (or official Blanco) party is constitutionally entitled, created a tense political situation. The central political issue in Uruguay is constitutional reform, which the Baldomir Government, representing the liberal Colorado party, is determined to secure and the opposing party of Senator Luis Alberto Herrera is as intent on preventing. Unable to get constitutional change through the Senate, in which, by the Constitution, the Nationalists have one-half the seats although the party represents only one-sixth of the electorate, the administration has decided to submit the proposed reforms to plebiscite next March, when elections for Congress and President are due. A motion was introduced into the Senate in the fall to make possible the reelection of President Alfredo Baldomir. In November the National Herrerista party presented a motion asking for the suspension of the law making military training compulsory in 1942.

Whether or not Senator Herrera is as strong a Nazi sympathizer as his anti-United States attitude would indicate, he has been willing to make political capital of problems of inter-American cooperation and hemisphere defense. The administration party has swung the country so far as foreign policy is concerned, however, and Uruguay has taken the initiative in a number of measures designed to assist the democratic cause. First of these was the question of bases. Taking the position that River Plate defense was directly linked with continental defense, a $17,500,000 loan has been obtained from the United States, one-half reported to be an outright gift, for the construction of a naval air base at Laguna Negra, commanding the entrance to the River Plate. The base will be under Uruguayan sovereignty but available to the United States in the event of war. Again Uruguay took the initiative, in June, when it proposed to provide 'positive implementation of the policy of hemisphere solidarity' by changing the 1939 neutrality regulation adopted at Panama (see 1939 Revision) to grant nonbelligerent status to any American nation forced into war with a non-American power 'in defense of its own rights.' By September only 4 of the Latin American states had rejected the proposal — Argentina, Colombia, Peru and Chile. The entry of the United States into the War, following the Japanese attack at Pearl Harbor, brought this question out of the realm of the academic, however, and Argentina and Chile have since fallen in line and will grant North American vessels in their ports all the facilities accorded to nations at peace. The Colorado party, on Dec. 9, announced that it would ask the Government to declare war on Japan but no such action has been taken.

The immediate transfer to active service of idle Axis vessels, with adequate compensation, which was recommended, in August, by the Inter-American Financial and Economic Advisory Committee, was originally suggested by Uruguay. Accordingly, the Republic has requisitioned a number of Italian, Dutch and Danish ships.

The permanent Congressional committee to study subversive activities created in October has had its authority extended to cover government departments, the Army and the police. Its quiet investigations have resulted in findings which led a member of the committee to declare the Nazi threat greater even than in June 1940, when an alleged plot to seize the country was uncovered. Eight leaders implicated in that plot are still being held for trial. The large Italian population — 100,000 out of a total population of slightly over two million — lends significance to a military Fascist organization uncovered by a raid of the committee on its headquarters Dec. 30. Student demonstrations broke out in June against a new pro-Nazi paper, La Libertad, edited by a Nationalist Deputy, which the news vendors boycotted. The Minister of the Interior, in August, recommended the closing of the Fundación Española, thought to be the tool of the Falange, which has been violently anti-United States.

A River Plate Regional Economic Conference opened in Montevideo Jan. 27. In addition to the five countries directly concerned — Argentina, Bolivia, Brazil, Uruguay and Paraguay — Chile, Peru and the United States were represented by official observers. The chief action was a convention recommending that Argentina, Brazil and Uruguay renounce most-favored-nation treatment for themselves during the next ten years in order to promote the fortunes of land locked Bolivia and Paraguay. Conventions were also adopted providing for reciprocal preferential treatment of each other's products; guarantees of freedom of transit; a regional parcel post system; and facilities for the interchange of banking operations. A regional customs union between the River Plate countries, suggested by Argentina, was the subject of a special recommendation. A permanent office, with headquarters in Buenos Aires, was established. In spite of its unconditional most-favored-nation commercial policy, the United States recognized the need, in the present world situation, of bilateral accords and regional agreements in the interests of increased inter-American trade.

The year 1941 was marked by improved commercial relations between Uruguay and the United States, a fact of great importance in view of the loss of European markets. A more lenient exchange policy towards the United States has gone hand-in-hand with a notable increase in North American purchase of Uruguayan products, especially wool, which increased nearly tenfold, the United States absorbing nearly 90 per cent of the exports of a commodity on which over 80 per cent of Uruguay's external purchasing power is based. For the first half of 1941 shipments to the United States were four times as large as in the corresponding 1940 period and Uruguay had a favorable trade balance with the United States of $21,345,000, as compared with only $3,553,000 in the first half of 1940. Negotiations for a reciprocal trade agreement with the United States, which broke down in 1939, have reached the final stage. Hearings on it were held in the United States in June and July, simultaneously with hearings on the agreement concluded with Argentina.

The highly satisfactory trend in foreign trade in 1941 may account for the failure to use the Export-Import Bank loan of $7,500,000 granted late in 1940. This credit, available to the end of 1942, was probably a contributing factor in the recovery in value of the peso. Lend-lease credits of undisclosed amount have been extended by the United States for the purchase of military and naval supplies. Revenue from newly enacted taxes will service the new internal bonds issued during the year to consolidate floating indebtedness. The entire funded debt of the Republic on June 30 was P. 419,635,000; the external funded debt totaled P. 142,027,000. The budget for 1941 anticipated a deficit of P. 6,643,200, but the actual deficit may exceed P. 22,000,000. See also PAN-AMERICAN AFFAIRS.