Opposition leaders in Uruguay accused Argentina of “exerting pressure inside the G20 and the Organisation for Economic Co-operation and Development (OECD)” so the neighbouring country would be labelled a “tax haven,” the Montevideo media said.
Last Friday, while addressing the G20 presidents present, French president Nicolas Sarkozy urged the international community to “isolate Uruguay because it is a tax haven.”
His statements generated a formal complaint from the Uruguayan government. But the Uruguayan opposition has now backed their government and is blaming Argentina for Sarkozy’s statements.
“His statements come from an accusation made before the OECD by Argentina against Uruguay,” senator and Partido Colorado’s leader Pedro Bordaberry said.
Senator Jorge Larrañaga, from the opposing Partido Nacional urged both Argentine and Brazilian governments to clarify where they stand on the matter.
“Are these our trade partners?” he wondered. “Let them reject or support Sarkozy’s statements. And if they do agree, maybe we should reconsider our membership to the Mercosur,” Larrañaga warned.
Since 2009 Uruguay was extended its network of bilateral treaties on tax information, but the OECD considers this insufficient since the country hasn’t come to an agreement with any of its “relevant partners,” namely Argentina and Brazil.
Uruguay fears that both Argentina and Brazil’s flawed taxing systems and records are no match for the sophistication, clear rules and long standing tradition of respect for private property and debts.
Besides Uruguay’s long standing reliable financial system, this includes secret accounts but also lifting the veil with a judicial summons, has survived most contagions from its financially unstable Mercosur partners. The last of these experiences was in 2001/02, when the Argentina defaulted on its massive foreign debt and the country’s economy melted.
The contagion reached the Uruguayan banking system in 2002 when Argentine seeing what was happening in their country rushed to withdraw their deposits from Uruguayan banks.
Uruguay withstood the impact, the banking system survived with some casualties, and the country successfully restructured its foreign debt. Since then deposits of foreigners have reduced drastically to a maximum of 20%, compared to the 2001/02 experience when they stood at 50%.