Uruguay privatization scheme jolted by opposition


MONTEVIDEO, Uruguay -- President Alberto Lacalle's plan to privatize the large state sector of Uruguay's economy was disrupted when the government opposition garnered enough support in a plebiscite to call a referendum on the plan.

Opposition Senator Danilo Astory, spokesman of a 'Commission for the Defense of the State Patrimony,' said Thursday that more than 30 percent of those entitled to vote participated in the plebiscite, forcing the government to conduct a referendum on the privatization law within 120 days.


State enterprises and agencies account for 40 percent of Uruguay's $9.4 billion gross domestic product, employing 20 percent of the country's work force.

Thousands of flag-waving, chanting demonstrators poured into downtown Montevideo, with cars sounding their horns in an early celebration of the opposition challenge to the government's plan.

Interior Minister Juan Andres Ramirez conceded the opposition's success, but warned the Lacalle administration will keep on striving to trim down the public sector.

'Enough votes were collected to call for a referendum against the privatization law,' Ramirez said in a news conference. 'Now, we must resolve this situation in a new electoral round. The government will stand by its policy, and we hope the people will support us.'


The Uruguayan labor union confederation had asked its members to reject the plans to sell public enterprises.

Opponents of the privatization policy were required by the constitution to win a minumum of 25 percent, or 581,000 of the 2.3 million Uruguayan voters. Early projections based on exit polls, indicated the vote against the government totalled more than 725,000 citizens, or well over 28 percent.

The privatization law was approved by Congress in October, 1991 after 18 months of hard-fought debates, and is a key element in President Lacalle's plan to liberalize the Uruguayan economy.

The Frente Amplio coalition, grouping communists, socialists, former Tupamaro guerrillas and smaller groups, challenged the scheme and began a campaign to subject the law to a referendum. Voting will be mandatory for the referendum.

According to unofficial counts, in Montevideo 37 percent of voters rejected the privatization policy.

After the law was passed, seven foreign corporations expressed interest in buying or investing in the state telephone and telecommunications ANTEL company. In a bid, the government selected Canada's BCE Telecom International, Britain's Cable and Wireless, Germany's Detecon, France's Telecom, and the U.S. corporations Bell Atlantic, Southwestern Bell, International Holding and GTE.


American Airlines, Vasp of Brazil, and Spain's Iberia submitted bids to buy the Uruguayan state airline PLUNA. The government prepared to offer the electric power company UTE for sale.

The privatization procedures can now go on regarding the administrative phases, but the eventual transfer to private investors will be delayed until after the referendum.

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