Security & Strategic Review - August 2023

URUGUAY: Slow government response to Uruguay’s water crisis

Amid the country’s most severe drought in the last four decades, Uruguay’s government led by President Luis Alberto Lacalle Pou declared a state of emergency in the capital Montevideo on 19 June. A raft of measures has been introduced to improve access to drinking water and support water-intensive sectors. But the water crisis is not expected to end until much heavier rainfall returns, adding to fears of a dry and difficult winter ahead.

The state of emergency announced by the Lacalle Pou government entailed measures such as tax exemptions for bottled water and plans to build a new reservoir and pipeline on the San José River, a tributary of the Santa Lucía River, a major water source for agricultural producers in the south of Uruguay. On 5 July Uruguay’s congress also approved an emergency fund to address the crisis and announced that it would guarantee two litres of bottled water per day for 500,000 Uruguayans on low incomes.

The urgency to find alternative water sources is driven by the alarming drop in volume in Montevideo’s main water source, the Paso Severino reservoir, which, as of 4 July, had less than 2% of its reported capacity of 67m cubic metres. Although light rains in July have brought some relief, Uruguay’s national meteorological institute (Inumet) does not expect rainfall heavy enough to refill the reservoir until the springtime (September-November).

A report by the International Monetary Fund (IMF) released in May highlighted that the 2022-2023 summer season (December-February) was the driest and the second hottest in the last 42 years, with rainfall 64% lower than the historical average and temperatures about 1.4°C above the historical average. Apart from causing the shortage of drinking water, the dry summer has also impacted Uruguay’s agriculture production, which accounts for nearly 40% of Uruguay’s exports. As of January, soybean cultivation had a yield 26% lower than the historical average. The agriculture ministry also estimated in January that the drought had caused direct losses of almost 1.4% of 2022’s annual GDP.

Left-leaning figures, such as former president José Mujica (2010-2015), have criticised Lacalle Pou’s right-of-centre administration for failing to build more reservoirs earlier. Speaking to the press on 5 July, Mujica pointed out that the last major reservoir proposed during the administration of his successor Tabaré Vázquez (2015-2020) was going to be on the Casupá stream, another tributary of the Santa Lucía River. But the dam never materialised and the project ground to a halt when Lacalle Pou took office in 2020. His government has not favoured large state investment into infrastructure but rather turned to tax breaks for agribusiness, which were implemented in March to prevent a drought-induced economic slowdown for 2023.

Federico Kreimerman, who leads the workers’ union of the state-owned water utilities company Obras Sanitarias del Estado (OSE), made similar criticisms to the press on 6 July about Lacalle Pou, accusing him of using the Santa Lucía’s waters mainly for the benefit of private agribusiness groups rather than for the public drinking water supply. At the end of May the OSE union joined other trade unions of the umbrella trade union organization Plenario Intersindical de Trabajadores-Convención Nacional de Trabajadores (PIT-CNT) in protest, demanding measures such as the tax exemptions on bottled water and for the construction of new dams, pressure to which the government appeared to have yielded in June.

Government support for agribusiness sector

The Uruguyan left has criticised President Lacalle Pou’s centre-right administration for prioritising economic growth over spending on initiatives to build new reservoirs. Lacalle Pou presented a bill on 2 March for congress to grant US$150m in tax breaks for corporations impacted by the drought, especially agricultural producers. Speaking to congress, the president stressed the need for the tax incentives to stave off a drought-induced economic slowdown, saying that “if agro is doing well, the country is doing well.”

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