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Opinion and Analysis: International

Venezuelan Support for Uruguay Provokes Bush-Chavez Debate

When U.S. President George W. Bush praised the benefits of investment in Latin America during his joint press conference with Uruguayan President Tabaré Vásquez early last month, he was probably not referring to Venezuelan investment.  But he could have been.  Venezuelan investment in- and integration with -Uruguay has increased heavily under Venezuelan President Hugo Chávez.  But Venezuela’s investment in its tiny South American neighbor has been characteristically different from the free market private investment that President Bush was referring to, highlighting a growing debate in Uruguay over its global integration: A la Bush or a la Chávez.  

At FUNSA, one of Uruguay’s oldest and most important factories, they are very clear about the difference, especially now.  

FUNSA (Fabrica Uruguaya de Neumaticos S.A) was founded in 1935 in the working-class Montevideo neighborhood of Villa Española.  A publicly-traded, privately-held corporation for most of its existence, FUNSA spun production from a large 80,000 square meter, six-city block facility.  One of Uruguay’s only rubber production plants, FUNSA was considered one of the primary factories in the nation.  FUNSA workers now reminisce that during its height, the “monster” of a company employed over 3000, and was actually composed of five or six factories and 25- 30 small business under the one roof, “producing not only tires, but also batteries, bicycle and motorcycle tires, balls, hot water bottles, mattresses and cement.”  FUNSA workers, who were well organized in the 1960s under the National Worker’s Union (CNT), now the PIT-CNT, fought and won important concessions such as relatively high salaries and a promise to employ numerous generations of FUNSA workers. 

But during the neo-liberal 1990s the plant ran in to trouble.  The owners began to close up and sell off each sector at a time, and in 1998, US-based Titan International bought up over 80% of the shares.  Titan essentially ran what was left of the mighty FUNSA in to the ground, in a move that FUNSA workers suspected was intent on eliminating Uruguayan competition to expensive imports from the North American corporation.  When the economic crisis hit Uruguay in 2002, Titan shut the doors, letting go of the remaining 400 plus workers, and walking away from millions of dollars of debt.   

FUNSA workers would not give in.  They set up camp in front of the factory, and installed a 24-hour watch against vandals or creditors, that might try to make off with their expensive machinery.  In mid 2003, the Uruguayan Bank of the Republic came to appraise the facilities and liquidate the assets, but the workers pushed to run the factory themselves.   Finally, after hundreds of days on the watch, the 90 remaining FUNSA workers where allowed entry back in to the plant.  They began to clean and refurbish the facilities and machinery which had been at a stand-still since the closure, and which FUNSA workers say was completely ransacked by the bosses and owners just after shutting the doors.

When the Bank of the Republic returned the following year to reappraise the property after nearly 9 months of cleanup- and what FUNSA workers say amounted to a total of 153,000 solidarity hours of work on the part of the 90 employees -the value of the factory had more than doubled to be worth $2.6 million. 

FUNSA workers where allowed to take over operation, and FUNSA became FUNSA Uruguay or FUNSAcoop, with the workers at the helm.  In mid 2004, FUNSAcoop fired up the machinery for the first time in 20 months and kick-started latex glove production.  In April of the following year, the workers spun out their first tires, but taking over the plant also meant taking over responsibility of the business’s millions of dollars of debt.  The FUNSA workers’ coop picked up some private investors to join in a 50-50 partnership, but the remaining debt hung over their shoulders. 

On January 13, 2006, FUNSA’s prayers were answered with a loan from the Venezuelan government for $280,000 which enabled the cooperative to pay off its creditors and go debt-free in less than three years from re-entering the factory.  In exchange, FUNSA agreed to support Venezuela with advice and expertise for two rubber factories in Venezuela (one to produce latex gloves and the other for tires). 

FUNSAcoop representatives say that the factory now employees 210 individuals and has a production of 300 tons of tires a month.  But that’s not enough.  Their goal is to double production as quickly as possible, thereby creating enough jobs to employ all of those that were laid off in 2002.  They are expanding slowly, and although they have focused on producing for the internal market, they have begun to export to some of their neighbors.  Longtime FUNSA employee and cooperative member, Nestor Rodriquez says that they are in now also in discussions about exporting to Venezuela.

“Venezuela has been very good to us,” says Rodriguez. “[Their support] was very important… so today the machinery is 60% in our hands.” 

The cooperative may share ownership of the company with its private investors, 50-50 or 60-40, according to who you talk to, but one of the major organizers in the recuperation of the factory, FUNSAcoop President, Luis Romero, says that the coop manages everything.

“What’s important to us… [is that] we control the administration and we control all of the production.  Our workers are at the same time, coordinators, and maintenance engineers.” Says Romero, “If we had 30% [ownership], we would be fine, if everything stayed the same.”

Venezuela’s loan to FUNSAcoop is not the only case of Venezuelan support for Uruguay’s recuperated factories.  The same day Venezuela agreed on the FUNSA loan, it also handed over $4.7 million total to Uruguay’s Vicental (formerly Midovers) and Envidrio (formerly Cristalerías del Uruguay) under an agreement between the Venezuelan and Uruguayan governments in Cooperation For the Recuperation of Productive Units (Convenio Marco de Cooperación para la Recuperación de Unidades Productivas).

Venezuela’s former ambassador to Uruguay, Pilar Urbaneja, commented at the time that the agreement was pushing to create new alternative models of social economy.

Daniel Placeres, Envidrio cooperative director, agreed a week later in an interview with Uruguay’s Radio Espectador when he explained that like FUNSAcoop, all of the production and administration of the glass producing factory will be carried out by Envidrio’s cooperative members who are all former workers of Cristalerías del Uruguay.  However unlike FUNSAcoop, Placers explained that “100% of the Envidrio shares will be acquired by the cooperative which is being formed by the Envidrio workers.” 

According to Placeres, the nearly $4 million received by Envidrio is still only 60% of their total estimated costs necessary in order to begin production, and will go to the purchase of machinery, the glass oven and part of the plant. 

In exchange for the loan, according to Placeres, Envidrio will transfer “work methodology” for local, national and international Venezuelan glass production.  Like FUNSAcoop, Evidrio also agreed to pass on advice and understanding to Venezuela for its future industry. 

The 70-person Uruguayan leather producing cooperative, Vicental, received $800,000 from Venezuela, to kick-start their new plant.  Vicental coop director, Ramón Martínez, explained in an interview last year that the coop will be producing for both Uruguay and Venezuela, and “will pay off the loan with knowledge.” Martínez added that they are going to set up a school in Venezuela to teach how to set up a Uruguayan-style tannery.

But these moves are just the latest in larger Venezuelan-Uruguyan cooperation.

On March 1st, 2005, Uruguay’s leftist coalition, Frente Amplio, took the reins of their country for the first time in history of the nation, breaking the traditional two-party system which had monopolized Uruguayan politics since independence.  Venezuelan President Chávez was in attendance, and met with in-coming President Vásquez the following day to discuss further integration.

Five months later, on August 10, 2005, Chávez and Vásquez signed a plethora of agreements in Uruguay’s capital, Montevideo, with a base in what they called, “solidarity, cooperation, complementarity, reciprocity and sustainability.”

The agreements strengthened ties between the two nations and touched on everything from energy to agriculture, social and endogenous development, communications, housing and habitat, industry, mining, commerce, transportation and tourism.  The same day, Uruguay’s Ministry of Social Development and Venezuela’s Ministry of Popular Economy signed an agreement towards “developing mechanisms of cooperation… in the social economy.”  The Ministries agreed to increase the exchange of information, education and resources between Uruguay’s “Emergency Plan”, which supports Uruguay’s poor with a wide range of social programs, and MINEP’s “Vuelvan Caras” (About Face) mission, which trains Venezuelans in job and cooperative education, and helps Venezuela’s poor to form their own collective small businesses. 

Trade between the two nations more than quadrupled from the previous year in the first six months of the Frente Amplio government, and the Uruguayan government signed on to Venezuela’s initiative to form the South American TV channel, Telesur.  Venezuela’s state-oil company, PDVSA, opened an office in Uruguay’s capital, Montevideo, in December, 2005, in what they called a further step towards Petrosur (a collaborative energy corporation, planned between various South American nations), and Venezuela promised to buy ethanol from the tiny nation, which had planted 3500 hectares of sugar-cane.   

Since 2005, the two countries have continued to strengthen their ties through various agreements, and Venezuela’s entry in to MERCOSUR (now composed of Argentina, Brazil, Paraguay, Uruguay and Venezuela) last summer further strengthened their alliance. 

Such integration, highlighting Venezuela’s support for Uruguay’s recuperated factories, is indicative of Chávez’s alternative trade proposal, the Bolivarian Alternative for the Americas (ALBA), where exchange is based on cooperation, and the repayment of a loan may also come in the form of goods, services or technology.  ALBA runs in direct contradiction to the US-backed Free Trade Area of the Americas (FTAA), whose goal it is to open markets regardless of the local realities or necessities.  

Nevertheless, even with Venezuela’s increasing investment, it was not President Chávez, but George W. Bush who stopped over for a day and a half in Uruguay while on his Latin American tour last month.

Paradoxically, in a push to open up global market access for Uruguayan goods, the Frente Amplio government is now courting increased ties with the United States, and it is difficult to say what this might mean for South-South or Uruguayan-Venezuelan cooperation.  With $1.8 billion annual exports, already the U.S. is Uruguay’s number one individual trading partner, and number two trading partner after South America’s largest economic block, MERCOSUR.  Many in the Frente government believe they have no choice but to look to the US market to save their global access woes, but opening the Uruguayan market to the United States may be just the recipe for a U.S. looking for to throw a wrench in Chávez’s plans of Latin American integration by opening the back door to MERCOSUR.    

Frente’s radical support is not willing to shelve its values for favorable access.  During a visit to the factory in early March, FUNSAcoop workers didn’t hold back on their plans to join a pair of anti-Bush marches set to greet the U.S. President on his arrival to the tiny country.

Three days before Bush set foot in Uruguay, a contingent of Uruguay’s impressive Housing Cooperative Federation, FUCVAM, set out on a 4-day, 200 km march to the Anchorena estate where their President would meet with President Bush on Saturday, March 10.  Waving Venezuelan and Uruguayan flags, they condemned Bush’s visit to their country, U.S. foreign policy and U.S. support for the repressive Uruguayan military dictatorship of the 1970s and 1980s. 

Over the past year, FUCVAM has been forging increasing ties with Venezuela’s Land Committees (Comites de Tierra), and delegations from both movements have visited each other to share expertise and experience. 

Integration has also been increasing among cooperative sectors.  In late March, Venezuela’s new SUNACOOP (Cooperative Superintendent) director, Juan Carlos Alemán, visited the head offices of MERCOSUR’s Specialized Cooperative Reunion (Reunion Especializada de Cooperativas de MERCOSUR) in Uruguay to get caught up on MERCOSUR cooperative integration and chart out a new path for Venezuela.

Although the visit is hopeful, there are fears among MERCOSUR’s cooperative sectors that Venezuela’s cooperative boom is unsustainable.  The high turnover rate at Venezuelan institutions also worries MERCOSUR cooperative leaders who are nervous that regardless of the potential, any energy put in to integration with Venezuela will again un-ravel when Venezuelan leaders decide to once again change the SUNACOOP head. 

Bush may praise the benefits of Latin American investment, but right now in Uruguay there is a hidden struggle over exactly what the means, and if the investment will come on the back of George Washington, or Chávez’s hero and South America’s liberator, Simon Bolivar. 

Frente’s Ministry of Economy may be looking to the U.S., but many Uruguayans are looking to Venezuela, in which they see multiple opportunities for growth and change.

FUNSAcoop workers are among them, and are very clear that Venezuela’s support has enabled them to take charge of the production of their own plant, through a model of foreign exchange which is challenging the traditional basis of the international market.

"We are satisfied," said FUNSAcoop President Luis Romero shortly after receiving the Venezuelan loan, "First, because FUNSA is everyone’s industry.  Second, because we ourselves are history, and third, because this is what the people wanted."