Uruguay’s new leftist president takes office, facing a financial balancing act

MONTEVIDEO, Uruguay (AP) - Yamandú Orsi, a telegenic left-leaning former mayor and history teacher, took office as Uruguay’s new president on Saturday, at the helm of a government that has pledged to strengthen the social safety net while reversing years of economic stagnation.

The inauguration of Orsi, 57, marks the return of Uruguay's Broad Front - a center-left mix of moderates, communists and hardline trade unionists - after a five-year interruption by the country's outgoing conservative president, Luis Lacalle Pou.

Cheers erupted as Orsi recited the oath of office before Congress on Saturday in Uruguay's capital of Montevideo. Outside the chamber, in the city’s main square, thousands of Uruguayans watching his swearing-in on giant screens shouted in support.

The ceremony came three months after Orsi’s presidential victory in a remarkably civilized election race between two moderates, praised as an antidote to the polarization gripping the region. In his speech, he took a dig at growing disillusionment with democratic norms across Latin America, which has resulted in a shift to the right, from neighboring Argentina to El Salvador.

"We all know well that we have to treasure our democratic construction in times where exclusionary logic and expressions of distrust in traditional politics proliferate," Orsi said in his inaugural address before a gathering of domestic and foreign leaders at the legislative palace in Montevideo.

He declared: "Let us always be adversaries, but never enemies. And let us distance ourselves as far as possible from cynicism."

The night before the ceremony, Orsi dined in Montevideo with his like-minded regional counterparts, including Brazil’s President Luiz Inácio Lula da Silva, Colombia’s Gustavo Petro and Chile’s Gabriel Boric.

The friendly scene cemented Orsi as the latest in the region’s swath of allied left-wing leaders - many of whom have struggled in recent years to combat rising inequality and stalling growth.

Many Uruguayans saw Orsi as the nostalgia candidate, recalling the Broad Front’s 15-year rule between 2005 and 2020. During that time, the coalition presided over a historic cycle of economic growth that reduced poverty and cemented the country’s pro-business reputation. The coalition also launched pioneering social reforms that won Uruguay international acclaim, including the legalization of abortion, same-sex marriage and recreational marijuana.

But in 2020, emerging problems like creeping inequality and surging crime ushered in Lacalle Pou's center-right government on promises of reforming the bloated state.

Last year, public frustration over the persistence of those problems helped bring Lacalle Pou's tenure to an end, as an anti-incumbent wave swept across the globe.

A cautious campaigner, Orsi - the former mayor of Canelones, a beach town known for its cattle ranches and high-tech - vowed to implement "safe change" for Uruguay's 3.5 million people.

Now he faces a difficult balancing act - between satisfying the demands of his more radical leftist constituents, which have called for unwinding some of the previous government’s cost-cutting measures, while boosting competitiveness to spur much-needed economic development.

"The country needs to recover a path of growth that generates not only a greater quantity but also quality of work," he said. "That allows a floor of salary dignity and, with it, a better distribution of income."

With a fractious coalition, experts say many of Orsi’s positions will become clear only after he takes office and is forced to make hard policy choices.

"The business community is taking a watch-and-see attitude until it's clear whether Orsi is in charge or whether his more aggressive leftist base is in charge," said Uruguayan economist Arturo C. Porzecanski, a global fellow at the Woodrow Wilson International Center for Scholars.

"If Orsi doesn't come out on top and measures that set the clock back get passed, then that will dim the economic outlook for the coming years.”

Keeping a tight budget will make it difficult to meet expectations of the unionists that promoted a controversial referendum to increase pensions and reverse the former government's decision to raise the legal retirement age from 60 to 65.

Orsi acknowledged the challenge in his speech, saying: "A lot of dialogue, an outstretched hand and the ability to understand the different sensitivities expressed by our community will be necessary.”

Last fall, Uruguayans shot down the proposed pension overhaul. Many praised the vote’s outcome as a rare, level-headed rejection of budget-busting populism that has long beset the region.

But union leaders - and their supporters, like Orsi's Communist labor minister - have continued to press their demands, challenging Uruguay’s investor-friendly reputation.

"The diagnosis is concerning when it comes to workers and their commitment to resolving disputes," Labor Minister Juan Castillo said last week, as powerful trade unions called a mass strike and multinational Japanese auto-part maker Yazaki shut down operations in Uruguay, citing high labor and production costs.

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DeBre reported from Buenos Aires, Argentina. Associated Press writer Nayara Batschke contributed to this reporto from Sao Paulo.