MercoPress. South Atlantic News Agency

Landslide defeat for Uruguayan government

The Uruguayan government suffered a landslide defeat this Sunday when 60% of a referendum electorate rejected a bill that would limit the monopoly of the government owned oil company and allow its association with foreign investors.

The long debated bill that began in 2001 and was jointly drafted by all parties in Parliament, but later only approved by the ruling coalition, was recalled appealing to the referendum mechanism contemplated in the Uruguayan Constitution with the valid signatures of 10% of the electorate.

The year long signature collection mechanism however rapidly turned the referendum into a confidence vote for the government when it coincided with one of the worst financial crises in Uruguay's history following the collapse of neighbouring Argentina's economy.

Several banks failed, foreign currency deposits were frozen, the economy contracted over 10% in 2002 after four years of recession, unemployment rocketed, emigration to Europe and United States ballooned and the general mood of the country turned particularly sour.

Eclectic President Jorge Batlle's ("route-less George") support plummeted to a mere 14% and ongoing scandals related to the banking crisis confirmed that a majority of Uruguayans didn't even bother to read the 18 articles of the bill and were determined to punish the government for repeated failings.

In spite of efforts from both the government and opposition to make it a lively debate among "progressive" and "conservative" attitudes towards government ownership of vital areas of the economy, such as the oil refining industry, (Uruguay has no oil or gas deposits), or even a bar brawl between "nationalists" and "foreign blood suckers stooges", the referendum inevitably marched towards a "no confidence" vote.

Under a Parliamentary regime the magnitude of the landslide would have forced the ruling government to resign.

However in Uruguay general elections are scheduled for next October and given the results analysts consider that the left wing coalition could finally in 2004, make it to the presidency in the first round.

In the 1999 elections the left wing coalition won the first round but lost in the run-off.

The irony of the referendum is that the left wing coalition that pushed for the rejection of the bill has anticipated that if it finally is elected to office it will look for an associate for the government owned oil company to ensure its subsistence.

Besides the rejected bill, originally drafted by all parties, was so watered down to achieve a common denominator that even the most intrepid investor would not dare become an associate of an over staffed company with the highest refining costs in Mercosur, a region which does not excel in this particular industry.

One of the absurdities of the rejected bill is that six of the 18 articles are to ensure that the government owned oil company workers are guaranteed thirty years job stability, either in the private or public sector.

Only the administration cost of holding the referendum was estimated by the Uruguayan Electoral Board in 7 million US dollars.