MercoPress. South Atlantic News Agency

Uruguay admits trade and economic relations with Argentina ‘couldn’t be worse’

Astori said that “each day we face an additional difficulty which represents a serious loss for Uruguay”

Vice-president Danilo Astori admitted on Friday that economic-trade relations with Argentina continue to deteriorate and seriously question Mercosur and Uruguay must therefore speed the search for other alternatives.

“Argentina protectionist policies are flagrantly contradicting the Treaty of Asuncion, (the founding stone of Mercosur), and even when the Argentine government has all the right to decide its policies, those decisions have no support in the Mercosur treaty”, pointed out Astori during a business forum.

He added that the current foreign exchange policy of Argentina which has seen the US dollar reach almost ten Argentine Pesos in the ‘blue’ or informal market with a 90% spread over the official exchange rate, already is seriously harming bilateral trade but “it’s not clear” how it can really affect the Uruguayan real estate market.

“To say this will not have an impact on us is to ignore reality; the issue is how do we behave to mitigate this possible impact, but at the same time even more important find other sources to diversify and improve our trade and economic situation”, argued Astori.

This week Uruguay president Jose Mujica named as new Deputy Foreign minister, economist Luis Porto who is in charge of monitoring negotiations with Brazil.

Mujica has said that because there have been no concrete advances with Argentina, Uruguay must deepen relations and trade mechanisms with the administration of President Dilma Rousseff that has been far more receptive to Uruguay’s demands.

Astori who has always been extremely prudent in his comments, for the first time has openly stated that bilateral relations with the government of Cristina Fernandez are not only stalled but they are further deteriorating and question the integration process in the framework of Mercosur.

“Trade links worsen with the hour. Each day we face an additional difficulty which represents a serious loss for Uruguay and specifically for certain manufacturing sectors of our economy, which have Argentina as the market for their production. Now they have definitively lost that market. But even more significant are the infrastructure challenges we are facing. For example in the dredging of the Martin Garcia channel (River Plate access) and along certain sections of the River Uruguay” admitted the Uruguayan Vice-president.

Astori also mentioned that “integration among Latinamerican countries has been poor and the Mercosur situation is extremely bad”.

“This bilateral blockade (from Argentina) is forcing the administration of President Mujica to look for alternatives” among which he mentioned contacts with Chinese corporations interested in dredging the Martin Garcia channel and recovering the railway system, that for years has been abandoned.

As Uruguay becomes a strong producer and exporter of grains, oil seeds and pulp, transport by rail and fluvial is much cheaper, while the maintenance of a poor roads’ system is expensive and never ending.

President Mujica is scheduled to travel to Beijing in coming weeks precisely for talks about these two specific projects and other infrastructure investments which China apparently is prepared to finance.

However as happens with many of these promises they also involve a massive presence not only of qualified Chinese staff but Chinese labour, which the Uruguayan unions have anticipated they will openly reject and not accept.