Domingo Cavallo
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Domingo Felipe "Mingo" Cavallo (born July 21, 1946) is an Argentine economist and politician. He has a long history of public service and is known for implementing the Convertibilidad plan, which fixed the dollar-peso exchange rate at 1:1 between 1991 and 2001, and the corralito, which restrained savers from withdrawing their own money from bank accounts and was followed by the December 2001 riots and the fall of President De la Rúa.
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[edit] Early years
Cavallo was born in San Francisco, Córdoba Province. He graduated with honors in Accounting (1967) and Economy (1968) at the National University of Córdoba and earned his PhD in Economics (1970). Several years later he got a second doctorate in Economics at Harvard University (1977).
[edit] Beginnings in politics
His involvement in politics began when he was chosen by his peer students to represent them at the highest government body of the Economics School (1965–1966). However, he was then coopted by military regimes, acting as Undersecretary of Development of the provincial government (1969–1970), Director (1971–1972) and Vicepresident of the Board (1972–1973) of the provincial Bank and Undersecretary of Interior of the national government.
In 1982, during the military dictatorship, Domingo Cavallo was appointed to the presidency of the Central Bank.
[edit] The 1980s
Notwithstanding this collaboration, when democracy returned in 1983 he became a close economic advisor to Peronist politician José Manuel de la Sota and was elected as a Peronist deputy for Córdoba Province in the 1987 national polls. Based on the Fundación Mediterránea think-tank, he prepared an academic team for taking over the management of the economy, and to that end he participated actively in Carlos Menem's bid to the presidency (1989). President Alfonsín's efforts to control hyperinflation (which reached 200% in July 1989) failed, and led to food riots and Alfonsín's resignation.
As Menem chose to deliver the Economy Ministry to senior executives of the firm Bunge y Born, he had to wait a few more years to put in practice his economic theories. In the meantime, as Menem's Foreign Minister, he was instrumental in the realignment of Argentina with the United States (1989–1991). Finally, after several false starts that caused renewed hyperinflation peaks, Menem put Cavallo at the helm of the Argentine economy.
[edit] The Menem administration
Cavallo was the ideologist behind the Convertibility Plan, which created a currency board that fixed the dollar-peso exchange rate at 1 peso per dollar, being able to sustain it with an influx of funds that the Bonex plan brought into the State coffers, through the mandatory subscription of long term bonds to all bank depositors. At the cost of recession, Cavallo succeeded on stopping inflation and made some progress opening new prospects for foreign investment in Argentina through massive privatization that included the state oil monopoly YPF (now Repsol YPF), the telecoms monopoly; several electrical, gas and water companies; the state airlines; two television stations; 10,000 km of roads and some railway lines; steel and petrochemical firms, grain elevators, hotels and even racetracks. The state welfare system gave way to private pension schemes. Yet, in spite of the state reduction, the budget deficit of the provinces reminded almost the same.
Often derogatively accused of being a technocrat, on one famous occasion Cavallo got furious because of a report by demographer Susana Torrado in 1994, and publicly sent her and the scientist at the National Scientific and Technical Research Council to "go wash the dishes."
[edit] Independent
In 1996, shortly after Menem's reelection, the flux of money from privatisation ceased, and Cavallo was ousted from the cabinet, due to his volatile personality and fights with other cabinet members, coupled with staggering unemployment and social unrest caused by his economic policies. Since mid-1995, the former minister has denounced the existence of presumed "mafias" entrenched within the circles of power. After his first public accusations, relations between Cavallo, and Menem and his collaborators became progressively more strained until Menem finally asked for his resignation. He went on founding the next year a political party, Acción por la República (Action for the Republic), which allowed him to return to Congress, this time as a Deputy for the city of Buenos Aires.
Cavallo ran for president in 1999 but was defeated by Fernando de la Rúa. He also ran for mayor of Buenos Aires, and lost to Aníbal Ibarra.
[edit] De la Rúa and the crisis
In 2001, Cavallo was called by President de la Rúa to lead the economy once again. This time he faced a weak government and several months of recession. He tried to earn more time, renegotiating the external debt with the International Monetary Fund, but the growing country risk and the pressure of the main investors and foreign holdings led to a bank run and a massive capital flight. In November 2001, Cavallo introduced a set of measures that blocked the usage of cash, informally known as the corralito ("little playpen"). The anger of the vast majority of Argentines created a framework for the popular middle-class protest termed the cacerolazo. The pressure of the Peronist opposition and other interest groups also led to the December 2001 riots. This critical situation finally forced Cavallo, and then de la Rúa, to resign.
A series of Peronist presidents came and left in the next few days, until Eduardo Duhalde took power on 1 January 2002. Soon afterwards the government decreed the end of peso-dollar convertibility, devalued the peso and soon afterwards let it float, which led to a swift depreciation (the exchange rate briefly reached 4 pesos per dollar in July 2002) and inflation (about 40% in 2002).
Cavallo's policies are viewed by many as major causes of the de-industrialization and the rise of unemployment and poverty endured by Argentina in the 1990s, as well as the collapse of 2001, the ensuing default of the Argentine public debt and the consequences of the uncontrolled depreciation of the peso.
[edit] After the crisis
Between April and June 2002 Cavallo was jailed for alleged participation in illegal weapon sales during the Menem administration.
Cavallo is currently Robert Kennedy Visiting Professor in Latin American Studies at the Department of Economics of Harvard University.
[edit] External links
- Personal homepage (in Spanish and English)
| Preceded by Erman Gonzalez |
Minister of Economy 1991–1996 |
Succeeded by Roque Fernandez |
