BACHELET'S VISIT TO URUGUAY MARKS CLOSER

C O N F I D E N T I A L MONTEVIDEO 000394

SENSITIVE
SIPDIS

DEPT ALSO FOR WHA/BSC KBEAMER

E.O. 12958: DECL: 05/27/2018
TAGS: PREL ETRD CI UY
SUBJECT: BACHELET'S VISIT TO URUGUAY MARKS CLOSER
CHILEAN-URUGUAY RELATIONS

Classified By: DCM Robin Matthewman; Reasons 1.4 (b)(d)

Summary
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1. (SBU) Chilean President Michelle Bachelet's visit to
Uruguay on July 7-8 highlighted Chile and Uruguay's shared
trade interests and vision for South America. The short visit
was well-received by the Uruguayan media and public, and
underscored the countries' like-mindedness in politics and
trade. The countries expressed their commitment to a closer
relationship and signed four agreements as well as a 40-point
joint declaration.


2. (U) The following agreements were signed between the two
countries:
--The Strategic Association Agreement, an agreement to pursue
closer political and economic ties between the countries;
--An additional protocol to deepen the 1996 Chile-MERCOSUR
Agreement, which will cut tariffs between the countries to
less than 1% of products;
--An additional protocol of the Basic Science Cooperation
Agreement; and
--A Cooperation Agreement between the Uruguayan National
Institute of Women's Affairs and the National Service of
Women of Chile. END SUMMARY.

A Common Worldview
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3. (SBU) Beyond these concrete demonstrations of partnership,
several aspects of the visit stressed the shared regional and
economic outlook of the two governments. Uruguay has long
looked to Chile as an economic model, and the two countries'
moderate-leftist governments find ample common ground. The
Strategic Association Agreement goes beyond trade to create a
bi-national commission to discuss "solid" social policies
especially to address hunger, poverty, uneven distribution of
wealth, and social exclusion. Bachelet emphasized that
agreements of this sort are uncommon for Chile and are
reserved for "partners in the international construction of
the 21st Century."


4. (U) Bachelet and Vazquez also concurred on: opposition to
the recent EU immigration legislation, the need for improved
regional integration, and the complexity of the social
challenges presented by globalization. The inauguration of
the Dr. Salvador Allende Civic Center in the town of Barros
Blancos of the state of Canelones marked the first official
head of state visit to Canelones. Bachelet, accompanied by
FM Fernandez and Chilean congresswoman and writer Isabel
Allende, memorialized the late Chilean president and spoke of
Uruguay's and Chile's shared history of military
dictatorships and commitment to democracy.

Increased Trade Opportunities
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5. (SBU) Through new and existing agreements, the GOC and GOU
touted strategies to pursue a closer trade relationship. In
an effort to bilaterally amplify the MERCOSUR free trade
agreement (FTA),of which Chile is an associate, the
additional protocol signed by Uruguay and Chile will begin to
eliminate all tariffs between the two countries except for
sugar and wheat. The Foreign Ministers also started working
on an agreement to eliminate double taxation with the goal of
augmenting investment between the countries.

Press coverage
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6. (U) Bachelet's visit was largely celebrated in the press.
The abundant coverage of her visit focused on economic
agreements and the strong links between Chile and Uruguay.
The media also highlighted the similarities in the
presidents, for example, they are both doctors and both
leading central-leftist governments with similar histories of
democracy. La Republica, a moderately leftist publication,
called the new opportunities for increased trade with Chile
the "best news all year." The far left La Juventud, however,
condemns the new trade agreements as destined to increase
income disparity. The press widely reported Bachelet's offer
of access to the Pacific Ocean as well as to the four billion
consumers covered by Chile's 58 FTAs. NOTE: Rules of origin
requirements would not allow Uruguay to directly access
markets through Chile's bilateral accords, but should spur
investment and partnerships. The approach underscores the
GOU's efforts to develop bilateral trade agreements
independent of its MERCOSUR partners. END NOTE.


Comment
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7. (C) The Bachelet visit was a chance for two economically
successful moderate left governments to strengthen their
cooperation within the region. Bachelet and her offers to
help Uruguay reach more markets won the hearts and minds
across the political spectrum in Uruguay. A cozier
relationship between the GOU and GOC outside of the auspices
of MERCOSUR is seen by some as a threat to regional
integration. Vazquez attempted to head off this sentiment by
assuring that an improved relationship with Chile is not
exclusionary and does not "go behind the back of any regional
integration program." Nevertheless, Uruguay is wary of the
constraints imposed by its junior membership in MERCOSUR, and
this can be seen as a small step towards greater independence
from that body. END COMMENT.

Baxter