Uruguay: President-Elect Mujica Courts Business Community

UNCLAS MONTEVIDEO 000108

SENSITIVE
SIPDIS
FOR WHA/BSC MARY DASCHBACH

E.O. 12958: N/A
TAGS: EINV PREL PGOV UY
SUBJECT: Uruguay: President-Elect Mujica Courts Business Community

REF: MONTEVIDEO 23 AND PREVIOUS

Summary

--------------




1. (U) On February 10, President-elect Jose Mujica made a dynamic
and much-applauded presentation on why to invest in Uruguay to a
large crowd of businesspersons. Speaking to an international crowd
in the resort city of Punta del Este, Mujica emphasized that his
administration would work hard to ensure the continuation of
Uruguay's open and positive investment climate. He included a form
on each table via which potential investors could make arrangements
to contact appropriate officials in his government, a mechanism
that reportedly has encouraged over 150 companies to respond
positively. End Summary.



A Promise to Protect Business Interests

-------------- --------------




2. (U) President-elect Jose Mujica sent a strong signal to the
foreign business sector February 10 by issuing a rallying call for
increased investment and production. Addressing over 1,500
international businesspeople during a charity lunch at a resort
hotel, Mujica, flanked by vice president elect Danilo Astori, and
with his entire cabinet on stage, emphasized that Uruguay is keen
to support new investment, and he welcomed investors to come and
live in Uruguay.

Q


3. (U) Mujica's message of fiscal prudence and openness to foreign
investment drew an enthusiastic response, tamping concerns among
many in the audience that Mujica may prove vulnerable to the
ideological currents of the more radical elements of his leftist
Frente Amplio coalition. Mujica was typically direct, reassuring
the attendees that he wanted the country to prosper from what he
anticipates will be gains in employment and state revenue resulting
from greater investment, stating "Investment is necessary for
entrepreneurs to create jobs." Specifically promising no
expropriations, he said, "we're not going to take you over or
double your taxes." He also said that, far from "killing the goose
that lays the golden eggs," his administration would do everything
it could to minimize risks while maximizing stability. In
explaining his vision of the relationship between state and the
private sector, Mujica cited his own proposal to revive the
country's railroads, remarking that "the government has to build
the rails, but then the private sector takes over."




4. (U) Astori preceded Mujica's presentation by reiterating the
investment-friendly aim of making Uruguay "more open to the world."
He also responded to the event's declared theme "Business in the
National Project of Development and Poverty Reduction" by promising
that increased investment would support the "network of social
protection . . . that will create permanent new opportunities for
those that most need them." In keeping with this aim, the USD 100
cover charge for the lunch raised USD 102,000 for the local
hospital.



Relations with Argentina Already Improving?

-------------- --------------




5. (U) The lunch was arranged by the Uruguay-Argentina Chamber of
Commerce, but the audience was packed with businessmen and women
from BraQl, Chile, Paraguay and Venezuela, as well as the U.S.,
Israel, Germany Belgium, Italy, Spain and China, among other
countries. Mujica, however, was careful to pay particular
attention to the 400 Argentines in attendance, and highlighted the
need to maintain strong links between the two neighbors. He struck
an upbeat note regarding the ongoing Botnia pulp mill dispute,
remarking that "we are willing to solve the situation" and that,
furthermore, "it will be solved soon." Mujica also made sure to

reference what many perceive as his special relationship to
Argentina, declaring that "I never feel I am a foreigner when I
visit Entre R????os or Buenos Aires." Also in the audience were high
ranking officials from the Blanco and Colorado parties, a
delegation from the Uruguayan PIT-CNT umbrella union, and members
of the diplomatic corps.




6. (U) The event was not only enthusiastically applauded and widely
reported, but has also proved potentially productive. In less than
24 hours, the future administration has received ovQ 150 requests
for meetings on possible investment projects. Among the projects
under consideration is a proposal by Argentinean businessman
Daniel Mazzucchelli to construct a USD 20 million high-end hotel on
Uruguay's popular Maldonado coast, while another Argentine company
(backed by Spanish investors) has expressed interest in a USD
100-200 million renewable energy project. The latter indicated
that they hope to be talking with the future administration at the
end of the month.



Comment

--------------




7. (SBU) Mujica hit a home run, in reassuring the business
community and reaffirming the message that Uruguay welcomes
investors. The strategy of engaging the Argentine private sector
is a wise one, as it underscores for both countries the importance
of working out the Botina dispute once and for all. On the
cautionary side, while Mujica seemed sincere in his pro-investor
concepts, implementation may require compromise with less business
friendly coalition partners-- where that "balancing" with the left
will show up remains to be seen. End comment.
Nelson