Foreign policy and defense
Uruguay is a nation in South America. Its capital city is Montevideo. Uruguay’s position as a buffer state between South America’s two major powers, Argentina and Brazil, characterizes foreign policy. Extensive trade is conducted with neighboring countries and there is an ambition to strengthen regional cooperation on the continent.
Uruguay protects free trade and has implemented a number of deregulations in foreign trade. Since the free trade organization Mercosur was formed between Uruguay, Argentina, Brazil and Paraguay in 1995, Brazil and Argentina in particular have become important trading partners. Mercosur is working to increase economic integration with the EU as a model. After 20 years of negotiations, a free trade agreement was also signed between Mercosur and the EU in the summer of 2019. The agreement covers 780 million people and a quarter of the world’s GDP. But for it to come into force, it must be approved in the parliaments of all the states involved, which makes it uncertain when and if it will actually apply (see Calendar).
- Countryaah: Overview of business holidays and various national observances in Uruguay for years of 2020, 2021, 2022, 2023, 2024 and 2025.
Cooperation within Mercosur has also been disturbed by the fact that Brazil and Argentina have not agreed to allow the smaller member states to enter into their own trade agreements with a third country, such as the United States.
Uruguay is also a member of OAS and Celac, as well as of Unasur. When seven of the former Unasur countries in 2019 formed the new Prosur, Uruguay chose to assume only one observer role (see Calendar). One reason was the divided view of the coalition government on how to deal with the crisis in Venezuela. With the change of government in March 2020, when Conservative President Luis Lacalle Pou took office, a course change in the matter is expected.
Relations with Argentina, which have traditionally been good, have been tense in recent years. In 2005, for environmental reasons, Argentina opposed Uruguay to build two pulp mills on the Uruguay border. Despite protests with environmental activists barred by border bridges, the first plant was put into operation in 2007. It was not until 2010 that the dispute was settled after the International Court of The Hague ruled that Uruguay should have better informed Argentina but that the factories did not violate any environmental requirements. However, when Uruguay announced plans to increase production in 2013, Argentina threatened to turn again to the International Court of Justice. (See also Industry).
The relationship was also strained by Argentina’s imposition of import and currency restrictions in 2012 to try to prevent capital flight. The Uruguayans believe it is in violation of the Mercosur commitment.
Outside the region, Britain has long been the most important partner. The British role was taken over by much of the United States after the Second World War. During the military regime in Uruguay from 1973 to 1985, the United States protested against torture and other abuses, but since the transition to democracy, relations between the two countries have been good. The countries are cooperating, among other things, to try to prevent money laundering from illegal drug trafficking in bank-tight Uruguay.
From the end of the 1980s the defense force was cut down considerably. There is no military service. The defense consists of volunteer recruits who serve for one or two years. Uruguay often contributes with troops to UN peacekeeping operations.
FACTS – DEFENSE
Army: 16 250 men (2017)
The air Force: 3,000 men (2017)
The fleet: 5,400 men (2017)
Military expenditure’s share of GDP: 2.1 percent (2017)
Military spending’s share of the state budget: 6.3 percent (2017)