01/03/2000

PRESIDENT'S INAUGURAL ADDRESS, MARCH 1, 2000

My greetings to the Presidents of our sister Republics of the Americas who honor us with their presence, as well as to the former Presidents with us today.

My greetings to the President-elect of Chile, as well as the Vice Presidents here with us, the representatives of international organizations and of our sister nations who join in this celebration of Uruguay's democracy.

My greetings to the young Prince of Asturias, to the representative of the Holy See, and to all the other delegates who have come to our country.

My greetings to the President of the Supreme Court of Justice.

My greetings to the political leaders of Uruguay, the fundamental actors in our national public life, to the members of the General Assembly, with whom we will seek to maintain an open, frank and sincere dialogue over the course of the next five years of shared work.

And finally, my greetings to the people of Uruguay, the reason and purpose behind all the issues of concern to a ruler, because they are the origin and the cause of our existence as a nation.

This is the first and only opportunity I will have for the next five years to address this General Assembly, and I feel that more than my right it is my obligation to state, before anything else and beyond what I think the Government of the Republic should do, what I am convinced Uruguay will be experiencing in our times, regardless of who would have been sworn in to honor the Constitution, sacred in this Republica.

It is commonplace to say that we are living at a time of growing globalization. Yet this is not the first time in the recent history of our Atlantic civilization that this has happened.

The times of protectionist mercantilism were left behind in 1820, and during the second half of the nineteenth century and the first twenty years of the twentieth technology transfer, lower shipping costs, mass immigration, and capital flows –which back in those times were even bigger than they are today-- paved the way during the second half of the XIX Century and the first twenty years of the XX Century to an open world, where even the weaker nations who were just awakening to institutional life could grow and develop. Determined peoples and illustrious governments made it possible for the countries of the Americas to reach levels of justice, equity and development that put them in the vanguard of growth. Uruguay was one of them.

But the events from 1914 to 1945 tore asunder that entire economic system. What for the countries of the Old World was pain and desolation, for a few of our countries implied a significant increase in wealth.

From 1950 to 1989 we lived in the throes of ideological and political warfare. Only in the last 10 years has the world launched a new cycle of openness and globalization, a process that has been sustained and fostered by the formidable scientific and technological changes we are witnessing.

In Uruguay, only as of 1985 and during the succesive administrations of Presidente Sanguinetti first, Presidente Lacalle then and Presidente Sanguinetti again did we begin to become collectively aware of the necessity of joining this new reality. These 15 years have implied difficult processes, beginning with the exchange liberalization of the 1970s and finally consolidated under the administration led by Dr. Julio María Sanguinetti, in which the Social Security reform, the start of the State reform, and the consensus that a country grows only without inflation, without fiscal deficit, and with exchange rate stability were fully accepted among us.

Today, in acknowledging that an era has passed and that Uruguayan society has made important achievements and positive changes, we recognize that another time is now beginning.

It certainly has major differences with the past. Differences as we look toward the rest of the world and domestically. We no longer have a European market open to our commodities, which the Americas can indeed produce with equal quality and better prices than any other producer. But things are not the same domestically either, and it would be a contraditio in se not to realize that to be part of a globalized world we cannot at the same time be open outwardly and closed inwardly.

Regulations, monopolies, oligopolies, impediments in all their forms, protected markets, both in the public and the private sectors, hinder and cramp the evolution of Uruguayan society. This will inexorably be the key issue in the coming years. We must look into it without fear, in a dialogue where reality sits at the head of the table and presides over our analysis.

All of this is part of what Uruguayan society rightfully feels, expresses and calls "the Uruguayan cost", which limits our competitiveness, and which cannot be resolved by stop-gap exchange policy measures, but instead requires attacking the very root of its existence.

Uruguayan society must reflect on what today is called second generation reforms, and logical institutional "re-engineering" in both the public and private sectors. I must make myself clear on this point, because I feel it that way, I’ve always felt that way and today, as President, I still believe in it and so I transmit it: because I feel that way and I hope to be able to work with you and analyze, as I said, with sincerity and openness those things that only when worked out among us will enable us to insert Uruguay in the real world.

In that sense we will propose:

In the first place, the Central Government must reallocate and cut spending that is often unnecessary and redundant.

In the second place, government corporations must continue improving their prices and the quality of their services. Both government and private enterprises must set their sights not on the national market but instead on the regional market, seeking out the associations that today are everyday fare, in order to consolidate, as some have already done, their successful presence in these markets.

In the third place, another no less important change will be the enhancement of the institutional relationship between the central government and the municipalities, based on the principle of decentralization established in the Constitution. This implies reaching an agreement as to the level and application of the financial transfers to support municipal action and structural reforms that will permit more efficient administration by the municipalities.

In the fourth place, we will make every effort to achieve total transparency and objectivity in the system of government acquisitions and concessions of works and services. We will be presenting a bill containing provisions that definitively clarify the most debatable aspects of our administrative contracts law. We will also make the necessary information available electronically to our citizens so that they will know for a fact what the State is spending their revenue on and how. Moreover, as part of this process of transparency, we will be presenting a bill to create a Government Auditing School to train government employees in the proper handling of public affairs.

In the fifth place, we will work for the deregulation of all those private sector activities where legal and regulatory provisions today permit, and even facilitate, the formation of monopoly situations or trust agreements. We intend to reduce to the minimum the administrative impediments to the access of new companies to all sectors of the country's economic life, with the exception of those where the law establishes limits for reasons of national interest. In particular, we will be sponsoring a law defending free competition in all economic activities, and establishing penalties for irregular forms of monopolistic or oligopolistic power over markets. In this same vein we will be promoting certain bills that are essential for achieving the purposes I have mentioned, including anti-monopoly laws, trust laws, bankruptcy and insolvency laws, among others.

In the sixth place, we will foster a clear separation between the "enterprise state" and the "regulator state." This will help to establish straightforward rules for the functioning of the different markets in which government corporations are active, and will encourage improvement of their services and their integration in the region with which we are and will remain definitely united.

Finally, the Social Security reform is generating a mass of public savings that cannot be used only to buy public debt. The savings must be used in sound national development projects for different areas of national production activities, as well as in generating resources to improve access by our citizens to the basic services in place: sanitation, drinking water, basic infrastructure and so forth.

Those who know me are aware that throughout my life I have always tried to speak my mind, regardless of the advantages or disadvantages of doing so. Thus in my capacity as President of the Republic I must say that the year underway will be a tough one for Uruguay, especially the first half, with some improvement beginning in the second half, and with an affirmation of that trend towards the year’s end.

Since the end of 1998 and over the course of 1999 Uruguay has endured the negative effects of events beyond our control.

Those events have included the Asian crisis that caused the fall in the prices of raw materials, the inordinate rise in oil prices, an exchange crisis in the region, and finally a tremendous drought in the spring. All of this led to a drop in income, as well as a general reduction of our economic activities, causing us difficulties that we are today determined to face and solve successfully.

The incoming Administration knows that to keep annual inflation at internationally acceptable rates that ensure investment as well as price and exchange policy stability, it must energetically reorganize public spending, maintaining a strict policy of spending austerity and fiscal responsibility.

The government is committed to that objective, and both I and the Ministers in this Cabinet support this decision. It will allow us to successfully surmount the difficulties we face today and make it possible to achieve reasonable growth of the economy at the end of the year underway, in the context of the economies of the region.

The entire country, and not just the government, is committed to our agricultural and livestock production, and to its consequent and necessary industrial transformation. The difficulties that have been endured lead us to announce that the government is ready to make efforts of several sorts to reestablish and foster its development. Those efforts will include suspending employer Social Security contributions for this year, with a view to seeking a system different from the current one when the time comes to prepare the General Government Spending Budget. We will also aid municipal finance so as to alleviate the pressure on farm production of the municipally levied Rural Real Estate Tax.

During the General Budget debates we will also propose a system generating an understanding between the municipalities and the central government, to put financial and wage policies as well as human resources in order, so that the central government is in a position to contribute to municipal treasuries, thereby benefiting rural producers in the payment of taxes on land.

To achieve the export levels Uruguay needs, agriculture and livestock continue to be an enormously important factor. Utilization of our water resources, improving our animal genetics and reproduction rates, ensuring modern and appropriate marketing are, among others, essential issues for achieving in ten years levels and volumes similar to New Zealand's today. In this sense we will continue with the policy initiated by PRENADER, and will apply the livestock plan to the stock raising sector, following the suggestions of our technicians and the contributions of our agricultural and livestock associations, especially those made by the Durazno association. To direct this policy we have asked the agronomist Gonzalo González –who was twice Dean of our University’s School of Agronomy-- to join our administration as Minister of Livestock, Agriculture and Fishing. Mr. González does not join the Cabinet neither as a member of the Blanco Party –which he is— nor as a voter of the Colorado Party –which he is not—but as a farmer and an academic, so that with the freedom of his knowledge and experience he may choose those collaborators he believes are best for the job, no matter where they come from or who they voted for.

All of this will improve our standard of living, will keep people in the countryside, will create jobs in industry, will bring down unemployment throughout the Republic and in the capital, and is in keeping with this nation's natural destiny.

Our industry was born with the support of two circumstances, first linked to our competitive advantages when the markets were open, and later under the import substitution system. Our industry has suffered from the changes that have been taking place worldwide. By reinvesting and modernizing it has been able to surmount those difficulties, and today shows a new capacity that makes it possible for it to look to the future with a full knowledge of the road must be taken to reach excellence and be active in the market. That change is also taking place in the union sector, which has largely become aware of the difficulties at hand. Both sectors claim against what we have called the Uruguayan cost. They are right. By reinvesting, improving productivity, seeking excellence, enhancing the associating processes, and working together both the unions and business associations while at the same time receiving better conditions from the State in order to compete, our industry has no reason to fear the future.

Uruguay, like all the developed countries in today's world, has become a services country, and services progressively represent an increasing percentage of the labor supply.

The most important sector, in all senses, is the tourism sector. As in all other activities, in tourism there are no captive customers, and depending on exchange differences and other reasons we compete with the entire world. Our tourism continues to be basically regional, and the time has come for us to show the world, with imagination and creativity, the many things Uruguay has to offer.

If in the industrial era, the gap between the powerful countries and the less developed countries broadened, aided by technology, today the information era is blurring that system of advantages and disadvantages, and it is conceivable for a country like Uruguay to rapidly position itself in various key areas of the millenium that is beginning.

Just as the huge railway lines, the highways or the dams, were the cornerstones of industrial society, today information systems are the basic infrastructure for the new age.

All our youngsters (and also those who are not so young) will have to be electronic literates just as we learned while in elementary school to write our first vowels and consonants . In the present time, the countries in the vanguard of the world are no longer those with huge natural riches. The winds blowing nowadays have replaced some paradigms with others. Abstract terms such as "information" and "knowledge" are concrete pillars of power, and information highways (Internet, for instance) have changed not only the economies but the lives of the countries.

An unsuspected aspect of the information technologies is that the people in the most remote rural areas feel they are at the center of the worlda; they can work from their homes, they can learn and they can grow. In all this the State has a central role to play, a key role: it will be the engine to pull the strategic vision which is essential for the future of Uruguay. .

It is time for the State, then, to assume in this case its integrating role, surmounting anachronistic antagonisms. In the coming world, the University, the entire education system –public and private– and our telecommunication company will have a leading role to play. The State shall be, together with civil society, a major factor for union and re-encounter, thus reincorporating, in a world where physical boundaries are tending to fade, a multitude of Uruguayans, specialists, who are living abroad, so that they share in the great cause of launching this society.

To this we are committed.

Uruguay, an open country with an international vocation, respectful of laws and liberties, could only be, from the very first day, as its Constitution establishes, a member to the Asunción Treaty. We have grown in Mercosur, and we aspire to continue growing in Mercosur. We believe in Mercosur and are not put off by crises: they can be useful for correcting mistakes. We have made progress in a few years more than other nations in many. Our objective within Mercosur is to broaden and consolidate it. We feel Mercosur as a united region, open to the world, organized in its functioning by a Technical Secretariat, confirmed in its institutions by arbitration solutions, in the constant search to broaden the region by incorporating other nations, so that at some point they, who given their historical origin have a vocation for unity inherited from our liberators, may form part of a formidable market from Alaska to Ushuaia.

All of these paths leading to improving the economy, have a single objective: the well-being of our citizens. Justice, solidarity, equal opportunities and liberty. All of these measures will make it possible for us to attend to our obligations in the area of health (to which Uruguay allocates 10% of its GDP and for whose organization we have had the honor of asking the cooperation of the former Dean of the School of Medicine, Dr. Touya as National Director of Health), education, security, housing. These measures shall give Uruguayan citizens the conditions of life they are entitled to.

Only those nations with open economies and a high level of incorporation of technology show acceptable unemployment rates. Uruguay can and must become a nation of such level.

It can be unhesitatingly affirmed that today's economy is the economy of knowledge, and therefore, the primary essential basis for Uruguay's expectations for growth.

We have been developing thus far, and successfully so, a very strong policy of supporting education for the weakest sectors of society and for youngsters of pre-school age. We have progressed a lot in this area and we will continue to do so. We will focus particular attention, with the resources already obtained, on the sectors living in the so-called "precarious settlements." At the same time we have decided to make the greatest efforts to eradicate that marginality. We say that the Central Government, in view of the land-use management errors of some municipalities, is ready to acquire lands, to lot them and provide them with services, in order that citizens in violation of property rights find other places to live, in a country that has an excess of land and not enough people.

We will also focus our attention on higher education. We are convinced that together with the University of the Republic, with its Rector Ing. Guarga, and also with the porivate sector, we will be able to do a lot inside the country and abroad. Besides, MERCOSUR is not only a political MERCOSUR –as it is—or an economic MERCOSUR, as it also is (and as it is important taht it keeps on being); it must also be a cultural, scientific and technological MERCOSUR where the wisdom of our academia works in common to develop a civilization such as we deserve and such as we are obliged to create in this America, which is great for what it has done and for what it can do by getting together.

Many years ago, when I participated in the 1966 reform of the Constitution, I contributed some provisions to its text, one of which is fundamental for me. It has to do with family and says:

"The family is the basis of our society. The State will protect its moral and material stability, for the better upbringing of our children within society."

In plain words that means that in life, it is more important to be than to have, and that to be, represented by moral, ethical and conduct values, is learned before anywhere else, in our mother's lap, in the heart of the family, and in school, our second home, which in this country will always be our second home.

Every social policy has the objective and purpose of consolidating the Uruguayan family, because by consolidating it we consolidate the values to which our civilization and our culture are linked, which are the same values imbued in us since we are born. Even if nobody tells us when we are wrong or when we are right, each one of us knows deep inside what he is doing and what he should be doing, because that is the center and heart of life in society.

The government I have the honor of presiding is a government of unity. It derives naturally from the Constitutional provisions we have put in place. But that unity, represented by the government, is not limited to its administration, but instead is to be extended to the different sectors of society, of political society and civil society.

As we have done thus far, in the next five years we will be reaching all political and social sectors of our nation, to listen and to inform, to dialogue and to maintain, with the firmness and clarity we have always done, our ideas and points of view, in the search for understandings and agreements that ensure harmony and seal, forever, the peace among Uruguayans. That is our duty. If we have gone through so many things, and have sufferd so many things and nobody among us can say thet somebody is guilty or that somebody is innocent, this is not the result of a manichean scheme of good against evil: we share the same history and that is why we have to seal forever the peace among Uruguayans.

This year, on September 23, 2000, we will be commemorating 150 years of the death of our hero General José Artigas.

His philosophical, political, libertarian and economic thinking is expressed with diaphanous clarity in the 1813 Instructions, particularly number three, which says, "civil and religious freedom shall be promoted to the fullest extent imaginable."

Our commitment from the government to all Uruguayans, rests on the profound identification I feel with that thinking and deepens with the oath I have taken here today.

Allow me to end with a personal reference: like all Uruguayans we came to this country in search of freedom, work, family and destiny. We arrived from the coasts of Catalonia, from the small port of Sitges, almost 200 years ago. Over all this time, and for generations, we have served the Nation on battlefields, in the Quebracho revolution, in the Government of the Republic, in exile, in political life, in journalism, always fighting for liberty and social justice. This has been our lifestyle for generations. I committ myself to it once again before you.