Early model Chevys cruise the capital here like mobile museums, lazing down boulevards lined with the graying grandeur of Old World architecture. And while the rest of Latin America salsas the night away, many youths in tiny Uruguay frequent dusty tango bars harboring a century of old passions and cigarette smoke.
But perhaps the quaintest thing in this South American country of 3.1 million is the economy. It is that rarest of welfare states--one that basically works. Government-run businesses are profitable and the poverty rate, thanks to generous state programs and job security laws, is the lowest in Latin America.
So as the walls of globalization push in on Uruguay--its two giant neighbors and biggest trading partners, Brazil and Argentina, have launched ambitious privatization schemes and free market reforms--Uruguayans have adopted a sort of bunker mentality toward preserving their old, paternal state system.
That struggle has underscored the Nov. 28 runoff race for president where the platforms of both leading candidates--Tabare Vazquez of the left-wing Broad Front and Jorge Batlle of centrist Colorado Party--share one key campaign promise: In a fast-changing and globalized world, Uruguayans still have the right to their cradle-to-grave welfare state.
"As I see it, we are very advanced in Uruguay. The benefits we enjoy are not excessive, they're progressive. And if any of the [presidential] candidates touched them, people would go crazy here," said Maria Eugenia Silva, 32, a magazine clerk in Montevideo. She is seven months pregnant, and by state law she will receive three months' paid maternity leave and three additional months of free medical care for her new infant. Besides that, like all workers in Uruguay, she receives a minimum of 20 days of state-mandated vacation time. A generous retirement package awaits in her twilight years.
"I want nothing to do with globalization," she said. "We're happy the way we are."
The move to conserve the century-old welfare state is embraced by both political factions vying for the presidency, but Vazquez's Broad Front coalition, which includes moderate socialists as well as Marxists and former Tupamaro terrorists, has gained the most from reform jitters.
The coalition headed by the 59-year-old cancer specialist and former mayor of Montevideo won less than 20 percent of the vote in national elections last decade. But Vazquez's promise of slow economic change has struck a chord in this nervous nation, and last month he easily beat the candidates from Uruguay's traditional Colorado and National parties. He took 39 percent of the vote in the first round of elections, which put him on top, but short of the majority he needed for victory.
But with slightly more than a week to go before the final runoff, he's now in a dead heat with Batlle. Batlle, a 73-year-old senator whose great uncle, a former president, founded the welfare state, has successfully portrayed his Colorado Party as a moderate alternative to the Broad Front. Once a public supporter of privatization, Batlle, who has lost four presidential races, has publicly rejected the idea of selling off state industries, and has put Vazquez on the defensive by painting his party as extremist.
Batlle's spin, plus a freshly struck political alliance with the center right National Party, have helped him play catch-up. "But in reality, there is very little difference in the ideologies of the two candidates," said Montevideo-based political analyst Luis Eduardo Gonzalez. "Regardless of who wins, we will see slow, slow change in Uruguay. Because that's what the people want."
The welfare state has existed here for almost a hundred years, brought by liberal-minded European immigrants whose ancestors populate this country of soft, rolling hills and mild coastal beaches. One in every five Uruguayans works for the state, which provides blanket health care coverage, manages casinos and hotels and even covers funeral costs for the poor. Perhaps because of its small population and low birthrate, social programs succeeded in creating a well-educated and long-lived people. On the average, Uruguayans live far better and longer than their counterparts in virtually every other Latin American nation.
They have eschewed many of the economic reforms that swept much of the region in the 1990s partially because the key benefits were not so sought after here. Hyperinflation, which caused havoc in Latin America during the late 1980s and early '90s and was one of the prime targets of reforms, actually brought a windfall to Uruguay. Even though it too suffered from ever-rising prices, its relative stability and tight banking secrecy laws caused wealthy Argentines and Brazilians to stash millions in "South America's Switzerland." And while reforms tackled inefficient government behemoths abroad, in Uruguay, state-run companies make a tidy profit, and are sometimes even competitive. In the cellular phone industry, state-run ANTEL has succeeded in winning a larger share of the market than its private competitor, BellSouth Corp.
It could be because Uruguayans like their companies state run; voters overwhelmingly defeated two plebiscites in seven years aimed at privatizing government-owned companies.
But Uruguay has not stood still. Foreign trade has grown substantially as this nation joined Argentina, Brazil and Paraguay in the Mercosur customs union, now the world's fourth-largest trading bloc. There have also been some baby steps at state reform. For instance, Uruguay has sold off 51 percent of PLUNA, the national airline.
But while Uruguayans reject any attempt to dismantle the welfare state, they have also grown frustrated with its costs--slow salary growth, a lack of new industries, relatively higher prices for some basic services and sales taxes topping 23 percent. So the two candidates for president have walked a tightrope of rhetoric to address both issues.
Both candidates have proposed cautious government spending cuts and boosting foreign investment and trade to stimulate the economy. Vazquez, however, has also a suggested tax breaks for poor farmers and a new income tax to redistribute wealth. Lately, he has found himself spending more time denying the statements of his handpicked and often more left-wing advisers. If he wins, analysts say, his hardest task will be keeping his moderate promises while not incurring the hard-liners' wrath.
"We are rejecting the corrupt savage capitalism that has totally failed Latin America," said Eleuterio Fernandez Huidobro, a former high-ranking member of the Tupamaro terrorists, who killed Dan Mitrione, an American police adviser accused of teaching torture, in 1970, and kidnapped British Ambassador Geoffrey Jackson in 1971. Fernandez has been tapped as Vazquez's point man on national defense.
Statements like those have helped Batlle's contention that the Broad Front is too far left for Uruguay, which many here call a progressive but not extreme country. Batlle is suggesting slow progress, too, but more focused on flexible labor laws and limited government outsourcing.
But for many here, even that is too much too soon. "Job security is more important than anything," said Roberto Recuero, 45, a microwave transmission specialist for the state telephone company. He said he has watched fearfully as unemployment rates swelled with the firing of public workers as economic reforms were introduced in countries such as neighboring Argentina. "Tabare . . . will protect our jobs from the foreigners," he said.
CAPTION: Tabare Vazquez of the Broad Front won first round vote.
CAPTION: Colorado Party candidate Jorge Batlle is gaining in polls.