Can you imagine a nation’s president, a former guerilla fighter with socialist leanings, enacting policies that favor business and encourage foreign investment? How about a leader who prefers living in a farmhouse rather than the presidential mansion?
That person is José Mujica, the 79-year old president of Uruguay who finishes his five-year term in March. Uruguay, a small South American country sandwiched between Argentina and Brazil, does not allow a president to stand for reelection, so later this spring, Mujica will take a seat in the senate.
In the 60s and 70s, Mujica was a guerrilla leader, imprisoned and tortured by Uruguay’s repressive government. Freed in 1985, Mujica shed his violent past, opting instead to become the voice of pragmatism – the art of the possible.
Still, his Socialist leanings are apparent. As president, he lives in a farmhouse with wood heat, saying it frees him from the shackles of consumerism.
But doesn’t consumerism drive a market-based economy and create tax revenues and jobs? His answer to Fortune Magazine: “Life does not deserve to be turned into a slave for the pure and exclusive accumulation of junk . . . But I’m not stupid. I know this is not an economic recipe I can apply to the people.”
Uruguay has 3.4 million people, about half the population of Washington State. Its gross domestic product (GDP), a universal measure of a country’s economic success, has grown an average of 5.6 percent per year and on Mujica’s watch, the proportion of people living in poverty dropped from 40 percent to around 12 percent.
While many South American countries shun outside investment, local and foreign money has risen to 22 percent of GDP under Mujica. The U.N. reports that in 2014, direct foreign investment slumped by 23 percent in Latin America and the Caribbean while soaring 9 percent in Uruguay.
The World Bank ranks Uruguay ninth out of 32 countries in the region for “ease of doing business.” That is far higher than neighboring Brazil and Argentina, where nationalist policies have foiled foreign investors and local producers alike, and socialist Venezuela.
Uruguay’s flagship foreign investment is its new $2.5 billion pulp complex at Punta Pereira, on the nation’s southern coast. Pulp is a major ingredient in the manufacturing of paper. The facility is now the largest pulp mill in the world, turning Uruguay’s plantations of eucalyptus trees into 1.3 billion tons of pulp a year.
The plant, which meets stringent European air and water quality standards, creates 5,000 direct and indirect jobs, with an annual payroll of over $100 million. It is also expected to contribute $844 million to Uruguay’s GDP. The industry’s importance to Uruguay is equivalent to that of Boeing in Washington.
Fortune reported that Uruguay’s beef industry is thriving as the government funds a comprehensive system for electronically tracking cattle, which has helped it access demanding foreign markets. Conversely, Argentina’s cattle industry has been devastated by periodic export bans and domestic price controls. Uruguay has also developed one of Latin America’s leading software industries by easing the path for foreign startups, many of which have fled Argentina.
Mujica has his critics. The Socialist Party says he hasn’t done enough, while the nation’s chamber of commerce is complementary, but takes issue with the influence of labor unions and the continued prominence of state-run companies.
While Uruguay’s economic output pales in comparison to ours, Mujica’s governing style is important to note.
Mujica is a pragmatic problem-solver, a humble leader who focuses on serving the people who elected him. And, most interestingly, he is not caught up in the trappings of presidential power.