Viva Uruguay!

This is fascinating, at least to me. Were I younger, and more daring, I might be moving  to Uruguay.

Based on this piece at Truthout, Uruguay Takes on London Bankers, Marlboro Mad Men and the TPP, Uruguay seems to be doing a whole lot more things right than the good ole U S of A. And, so far, its leaders are heroic in resisting pressure from the global corporatocracy. The author, Michael Meurer, explains:

Uruguay has spent the last decade quietly defying the new transnational order of global banks, multinational corporations and supranational trade tribunals and is now in a fight for its survival as an independent nation. It is a rich and important story that needs to be told.

What Uruguay is doing seems to be working. It’s annual average growth rate over the past decades is 5.6%. That’s huge. What’s the formula for Uruguay’s success? In two words: Progressive policies:

In November 2014, Uruguayan voters voiced approval for their government’s policies of social tolerance and public spending on early childhood education, affordable universal health care and social safety net programs by re-electing former president Tabaré Vasquez from the ruling Broad Front party. With support from allied green and radical left parties, Vasquez won a landslide victory against a neoliberal opponent who ran on a platform of slashing public sector spending and opening the nation’s economy to foreign investors. Instead, Vasquez’s return to the presidency in 2015 will extend the Uruguayan social democratic experiment another five years to 2020. London’s neoliberal, supply-side bankers are not amused.

But the global powers that be are not amused.

First, the London financial establishment feels strongly that Uruguay must change its ways:

Less than a week after Uruguayan election results were certified, Capital Economics, a London-based financial think tank aligned with British Prime Minister David Cameron’s brand of aggressive neoliberalism, issued an economic report sternly warning that Uruguay is going to face tough economic times after electing another leftist president unless they change their ways. The language of the Capital Economics report is telling:

“Capital Economics concludes that given Vazquez’ promises of continuity and more social spending, and the Uruguayan economy running at full capacity, any attempt to bolster domestic demand most likely will generate more inflation and more strains in the balance of payments.

“Our view is that policymakers need to tighten fiscal policy and pass supply side reforms to boost medium-term growth,” says the report.

Likewise wage indexation is widespread in Uruguay and according to the IMF, as many as 90 percent of labor contracts are indexed, which contributes to high and persistent inflation. “More generally, reducing the power of trade unions will help to ease labor market rigidities.””

Got that? Reduce the power of trade unions to ease “labor market rigidities.” As Meurer points out, in plain speak that’s “bust unions.”

I love this passage:

The leftist economic experiment taking place at the opposite end of the globe in tiny Uruguay is more than the bankers in London can tolerate, never mind that Uruguay, with minimal military expenses, has annual deficits nearly 600 percent lower than the UK as a percent of GDP. From the bankers’ perspective, Uruguay is setting a bad example by taking care of their people instead of catering to global financial speculators.

Uruguay also is an intense battle with Phillip Morris over its anti-smoking policies, a battle that shows what global trade treaties are all about:

Uruguay looms disproportionately large on the global stage at the moment because they have unwittingly vaulted into the vanguard of a global backlash against the TPP and TTIP due to a seemingly unrelated dispute with the international tobacco industry.

Uruguay has required cigarette manufacturers to dedicate 80% of their packaging surface area to health warnings related to cigarette smoking. The result? An approximately 50% decrease in smoking rates. Imagine that?

Which of course has Phillip Morris furious:

In the ultimate irony, Phillip Morris, which moved its global headquarters to Switzerland in 2002 for tax and liability avoidance, sued Uruguay in 2010 over the new labeling requirements under the terms of a bilateral trade agreement between the two countries. The Phillip Morris suit, which seeks $25 million in damages and weakening of the Uruguayan labeling requirement, is being prosecuted through the International Centre for the Settlement of Investment Disputes (ICSID) in Washington, DC. The ICSID is chaired by the president of the World Bank and funded from the Bank’s budget. It is a supranational trade tribunal that specializes in international state dispute settlements (ISDS).

Uruguay, however, is not the only country Phillip Morris has targeted under a trade agreement:

ISDS are at the core of both the TPP and TTIP, but on a truly global scale. If Uruguay were to prevail against Phillip Morris, the ramifications for TPP and TTIP enforcement, and the new global order the treaties represent would be far reaching.

While Uruguay’s brave and principled stand against Phillip Morris is heartening, it is also a preview of what could become the prevailing reality if the TTIP and TPP are allowed to go forward. The tobacco behemoth is also using international trade tribunals to sue the governments of Australia and Thailand over their attempts to place more prominent health warnings on cigarette packaging. The lawsuit against Thailand was successful and is being appealed by the Thai government. The litigation in various trade tribunals against the governments of Uruguay, Australia and Thailand has already intimidated both New Zealand and Britain into delaying proposed cigarette label changes similar to Australia’s.

I like underdogs and I hate cigarette manufacturers and bankers. I’m rooting for Uruguay.