Uruguay's President-Elect Pledges to Revitalize Economy

WHEN Senator Luis Alberto Lacalle, of the opposition National Party, takes over as Uruguay's new president in March, he will be faced with the challenge of carrying out his campaign pledge to usher his state into an era of privatization. Mr. Lacalle won the presidential race in general elections Sunday, promising to reduce the large role of the state in this country's economy and to stimulate private investment as the solution to economic stagnation.

``Uruguay is witnessing the end of a model in which the state is the main partner,'' he said shortly before the polls. ``The country has lost the sense of profit,'' Lacalle said. ``The only way out of a crisis is to have good entrepreneurs.''

According to provisional results, his Blanco (National) Party defeated the ruling Colorado Party with 37.4 percent of the vote against 28.8 percent.

The elections completely changed the political map of this small South American country, and mark the return to power of the Lacalle's Blanco Party for the second time this century.

Sunday's were the first free elections since 1971. Some politicians, including Lacalle, were banned from running in the 1984 general elections that put an end to 11 years of military rule and brought Julio Maria Sanguinetti of the Colorado Party to the presidency.

During his term, Mr. Sanguinetti reduced unemployment from 15 percent to 9.7 percent and lowered the inflation rate from 83 percent in 1985 to 69 percent in 1988. But this year's rate is expected to approach 100 percent, twice the official target. Dissatisfaction with the slow pace of economic recovery, local observers say, was one of the main reasons behind the defeat of Lacalle's main contender, Jorge Batlle, of the right-wing Colorado Party.

Although both men had similar proposals, Mr. Batlle's chances may have also been weakened by internal disputes within the ruling party. Senator Lacalle has said he will regulate the right to strike, cut the deficit, reorganize state companies, and carry out educational reform.

He also says he will try to negotiate better foreign debt conditions with the United States. Uruguay has met interest payments on its $6.2 billion US foreign debt, one of the highest per capita in the developing world.

The president-elect also says he will sell some of the country's gold reserves to help pay interest on the country's $1.8 billion public debt.

But observers say Lacalle will have a difficult task.

International prices for farming products - which account for virtually all of Uruguay's $1.3 million exports - are falling. And left-wing trade unions and 270,000 state employees out of a total work force of 1.2 million are likely to oppose attempts to privatize.

``Uruguay is coming out of a relatively peaceful stage into one of relative risk,'' said Tom'as Linn, a political analyst with the independent weekly B'usqueda.

When he takes over from President Sanguinetti for a five-year term, Lacalle must coexist with a Socialist mayor in the capital of Montevideo, where nearly half of Uruguay's nearly 3 million people live. Tavar'e Vazquez, of the Broad Front (left parties alliance), was elected mayor Sunday, bringing the left to an elected post of national prominence for the first time in the country's history.

The Blancos will not have a majority in Congress. Thus, Lacalle must negotiate with other political sectors, both within and outside his party, if he is to push forward badly needed changes.

In a brief address after the first unofficial results were disclosed, he said he would spend the next three months ``building the coalition government which is essential for the correct functioning of the Uruguayan government.''

This is the first time the idea of a coalition government has been floated in Uruguay, a country once known as the Switzerland of Latin America because of its long democratic tradition. And as political banners crisscrossing the streets of Montevideo are folded up, people are beginning to wonder who will be governing along side Lacalle when he takes office March 1.

Declining to give an answer, the president-elect said: ``In politics you do not make alliances the way you like, but the way you can.''