The disappointing performance of the economy and corruption allegations against high-ranking political figures have contributed to weakening popular support for the governing FA, which has exacerbated chronic factional tensions within the ideologically diverse coalition. However, the removal of Vice President Raúl Sendic, who has been at the center of a corruption scandal dating back to his tenure as head of state-owned ANCAP may help to ease tensions among the various parties and blocs.

Sendic is a protégé of former President José Mujica, whose MPP wields significant influence within the FA, owing to its status as the dominant faction within the Senate, where President Tabaré Vázquez’s government claims a majority of just one seat. The ouster of Mujica’s protégé could have triggered a crisis within the government bloc. But a curious set of circumstances enabled the FA to emerge unharmed, and perhaps even strengthened.

Under the constitution, a vacancy in the vice presidency is to be filled by the senator who received the largest number of votes in the most recent election. However, that was Mujica, who is barred from serving as either president or vice president in consecutive terms. But, as luck would have it, the next person in the line of succession was Mujica’s wife, Sen. Lucia Topolansky, who is currently the leader of the MPP.

Sendic was not formally charged, but swift action by the FA to put the scandal behind it has reversed the nosedive that sent support for the governing bloc plummeting to just 24% in July, slightly below the figure for the main opposition National Party (Blancos). A poll conducted earlier this month showed support for the party rising above 30%, compared to 26% for the Blancos, but those numbers provide clear evidence of widespread disillusionment with the political establishment.

Under the circumstances, the FA’s chances of retaining the presidency for a fourth consecutive term may well hinge on a strong recovery for the sluggish economy, which has been hurt by the poor economic performance of the largest members of Mercosur. A proposal to build a second paper mill creates the potential for a significant improvement over the medium term.

The Finnish investor, UPM, is well aware of just how eager the Vázquez administration is to see the mill project advance, a fact that has fueled suspicions that the company is wresting expensive concessions from the government in negotiations that have been criticized for a lack of transparency. An MoU was concluded on November 8, but UPM will not make a final decision to proceed until 2019, and a firm commitment will depend on tangible progress on infrastructure development, including state investment of more than $1 billion in rail and road networks and a port terminal. If all goes according to plan, construction of the new plant would begin in 2021.