25 people were killed during the events of last december (2001) where the Argentine peoples took the streets to claim for Cavallo' s resignation. 400 resulted wounded.Up to now, nobody has taken the responsability for any of the facts (be them economical, or political)
Here, some accounts on December' s events: the conditions in which Cavallo resigned. (Articles in Spanish and in English)
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Diario LA TERCERA- Chile
CAMINO AL DESASTRE
La caída del padre de la convertibilidad
argentina
Despojado de sus súper poderes,
atemorizado por la conmoción social que llegó hasta las puertas
de su casa e impedido de abandonar el país por tres jueces, Domingo Cavallo
abandonó el ministerio de Economía nueve meses después
de haber sido convocado por el presidente Fernando de la Rúa como el
"salvador" de la economía argentina.
Sin apoyo político ni popular, Cavallo (55 años) renunció
en la madrugada del miércoles 20 de diciembre del 2001, en medio de la
peor crisis de los últimos 50 años. Mediante una carta titulada
"Querido Amigo", Cavallo presentó su renuncia tras admitir
que se había convertido en un obstáculo para De la Rúa
en su intento por recuperar el país.
Vehemente y con numerosos adversarios, Cavallo repitió incansablemente
en los últimos meses que no dejaría su cargo. La realidad demostró
lo contrario, y hasta debió salir ayer a escondidas de su domicilio particular
por temor a ser agredido físicamente.
A ello se sumó la prohibición
a Cavallo de abandonar el país sin una autorización judicial previa
dipuesta por tres jueces de distintos fueros. El juez Julio Speroni dictó
la primera prohibición ayer por la mañana. El magistrado tiene
a su cargo la investigación sobre el presunto delito de contrabando cometido
en la venta ilegal de armas a Croacia y Ecuador.
Horas más tarde se conocieron resoluciones similares de los jueces federales
Jorge Luis Ballestero y Rodolfo Canicoba Corral, quienes investigan, respectivamente,
la operación de megacanje de la deuda que efectuó Cavallo a mediados
de este año y el otorgamiento de fondos para la lucha contra el narcotráfico.
La policía federal mantuvo
ayer un fuerte dispositivo de seguridad en torno al domicilio de Cavallo, quien
ocupa un apartamento en un lujoso edificio en la zona residencial de Palermo
de esta capital. Desde el miércoles por las noche varios miles de personas
se reunieron frente al edificio y profirieron gritos hostiles contra Cavallo
y exigieron su renuncia. Cavallo logró eludir el cerco periodístico
y abandonó su apartamento con destino desconocido.Su historia
Nacido en Córdoba y doctorado
en Economía en la Universidad de Harvard, desde muy joven destacó
por sus importantes cargos financieros. A los 21 años ocupó la
Subsecretaría de Desarrollo y Planeamiento Provincial. Tiempo después,
en 1982, presidió el Banco Central. Luego de esta experiencia decidió
incursionar en política. Así en 1987, representando al Partido
Justicialista, fue electo diputado por la provincia de Córdova.
Con la llegada de Carlos Menem a
la presidencia, fue nombrado en 1989 como ministro de Relaciones Exteriores.
Dos años más tarde aceptó el cargo que le cambiaría
para siempre su currículum: hasta 1996 se desempeñó como
ministro de Economía. Desde ese cargo, Cavallo impulsó la ley
de Convertibilidad que impulsó en 1991 y que sacó al país
de la hiperinflación al fijar el valor de un peso al de un dólar.
El mismo sistema que en estos días es fuertemente cuestionado y que está
a un paso de caer.
Al alejarse del justicialismo, fundó en 1997 el partido Acción
por la República, que se ha convertido en la tercera fuerza política
del país. El mismo año fue elegido diputado y dos más tarde
fue candidato presidencial.
Llamado por De la Rúa, Cavallo sucedió en el puesto a Ricardo
López Murphy. En sus nueve meses al frente del ministerio de Economía,
Cavallo impulsó severos ajustes del gasto público que incluyeron
recortes del 13% a los salarios de empleados públicos y jubilados y que
fueron severamente resistidos por la población.
"Querido amigo" se titula
la carta que envió Domingo Cavallo a Fernando de la Rúa presentando
su renuncia indeclinable.
La carta de renuncia del "súper ministro"
Horas después de la renuncia de Domingo Cavallo, el Ministerio de Economía
difundió la carta de dimisión que el ex funcionario envió
al hasta jueves 20 de diciembre de 2001 Presidente Fernando de la Rúa.
Encabezada con "Querido Amigo", Cavallo expresó que "los
acontecimientos que son de público conocimiento hacen que mi presencia
en el gobierno, lejos de ser una ayuda, se haya constituido en un obstáculo
para que usted pueda llevar adelante la importante misión que le ha encomendado
el pueblo argentino".
"Con la misma vocación de servicio al país que puse al aceptar
su ofrecimiento, le presento mi renuncia indeclinable al cargo con que me honra",
agrega la misiva.
Finalmente, Cavallo se despide de De la Rúa diciéndole que "cuente
con todo mi apoyo para sacar al país de la angustiosa situación
que estamos viviendo". Antes de su renuncia, Domingo Cavallo había
perdido los poderes especiales tras una resolución de la Cámara
de Diputados.
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AFTER ARGENTINA
Convertibility is finished. But the
repercussions for other emerging markets and the international financial architecture
are just beginning, writes Martin Wolf
Financial Times
Published: December 20 2001 19:37
| Last Updated: December 21 2001 07:55
Argentina's reckless rectitude has
foundered on the rocks of popular protest. With the departure of Domingo Cavallo,
economics minister and creator of the convertibility plan, the country faces
the possibility of a political collapse.
This denouement is no surprise: the economy is in its fourth year of recession;
unemployment is at 18 per cent of the labour force; and the government is defaulting.
The government's plan to cut spending by $9.2bn, nearly a fifth of the total,
was the last play of a hopeless game.
Yet transparency has also shown its
virtues. As Kenneth Rogoff, the International Monetary Fund's new chief economist,
remarked this week: "It is clear that the mix of fiscal policy, debt and
the exchange rate regime is not sustainable." Because the crisis has been
predictable, there may be minimal contagion to other borrowers. The latest spread
of Argentine dollar bonds over US Treasuries is more than 4,000 basis points
(40 percentage points). But Brazil's spread is 880, Mexico's 320 and South Korea's
120.
A global financial system that incorporates many economies with weak financial
systems, poor fiscal discipline or histories of monetary profligacy is prone
to such crises. For this reason, the debate over improvements to what is called
"the international financial architecture" is never-ending. But its
intensity varies with the immediacy of crises. Argentina's plight will give
it new urgency in three areas: exchange rate regimes and indebtedness; IMF surveillance
and support; and "private sector involvement" or, more bluntly, sovereign
bankruptcy.
First, the wisdom on exchange rate
regimes and fiscal policy is going to change, once again. After the unhappy
fate of adjustable peg exchange rate regimes in the east Asian crises of 1997
and 1998, conventional wisdom moved towards support for a "two-corner"
world, with freely floating rates at one end and currency boards, currency unions
or adoption of another country's currency as one's own at the other. Argentina's
fate is certain to dent the plausibility of currency boards and, perhaps, of
other hard currency regimes.
Argentina shows that any regime associated with a long economic decline is vulnerable.
If, as in Argentina, the economy is inflexible, such a long economic decline
is quite likely under an irrevocably fixed exchange rate, particularly in a
country vulnerable to external shocks. The likely conclusion from the Argentinian
disaster is greater unwillingness to support currency boards. Even dollarisation
is no panacea. A country would then avoid monetary meltdown but fiscal collapse
is quite feasible under dollarisation.
For this reason, the view of the
indebtedness that can be borne by emerging market economies will also change.
By the standards of a developed economy, Argentina's ratio of public debt to
gross domestic product, at 55 per cent, looks sustainable. But it is unsustainable
at real interest rates of more than 10 per cent. Unless a country has extraordinary
growth potential or a captive domestic financial market, it cannot allow public
sector indebtedness to reach such levels, particularly if debt is denominated
in foreign currency.
Second, the role of the IMF will,
once again, be put under the microscope. The story of Argentina's fall illustrates
the difficulty faced by the IMF in avoiding capture by its borrowers. Senior
officials at the Fund argue that the Fund is caught in a trap. If it refuses
to support the government, it will be blamed for the chaos that follows a default.
If it agrees to support the government, it will be blamed for any failure. It
cannot win.
Yet governments of leading high-income
countries are likely to be irritated by the way they have been dragged, willy-nilly,
behind Argentina's careering chariot. One proposal to address this is from Gordon
Brown, the UK's finance minister. In a speech last month, he argued for making
IMF surveillance "more transparent, more independent and, therefore, more
authoritative".* If an independent report argued that a policy was unsustainable,
it would be far more difficult for the IMF board to lend it support. If the
staff knew this, it should find it far easier to say no. The idea is intriguing.
But escaping from the past is enormously difficult, for borrowers and lenders.
Too often they continue until catastrophe strikes.
Third, the question of sovereign
bankruptcy procedures now seems still more urgent. Argentina is a particularly
important case, because it is the largest sovereign insolvency ever, at least
in dollar terms. Anne Krueger, the recently appointed first deputy managing
director of the IMF, enhanced the credibility of proposals for orderly restructuring
of sovereign debt with a speech delivered on November 26.**
Her proposal had four elements: a mechanism to prevent creditors from disrupting
negotiations by seeking repayment through domestic courts; a mechanism to enforce
responsible behaviour on debtors; a way to encourage lenders to provide new
money; and a way to bind minority creditors into a restructuring arrangements.
These ideas are not new. What is new is their provenance.
Yet such a mechanism, however desirable,
will be difficult to establish. As Mrs Krueger remarked, "the political
imponderable is whether our members are prepared to constrain the ability of
their citizens to pursue foreign governments through their national courts as
an investment in a more stable - and therefore more prosperous - world economy."
Predictably, there is much opposition to such ideas. Moreover, as the Institute
for International Finance - the trade union of lenders - has noted in its response,
it would take years for them to be enacted. Edwin Truman, a former senior official
at the US Federal Reserve and the US Treasury, has also noted that bankruptcy
procedures are the wrong answer if a country is confronted by a short-term panic.***
Providing large-scale official funds
makes sense in such situations, as the recovery of Mexico from its crisis of
1994-95 and of South Korea from the turmoil of 1997-98 have demonstrated. Mr
Truman argues that more short-term liquidity is the answer. He calls for an
"International Financial Stability Fund", raised by a small tax on
all cross-border investment - in effect a tax on the use of the international
financial system.
All such ideas for improved policy
in borrowers, greater discipline over official lending and ways of handling
sovereign insolvency and illiquidity must now be further up the agenda for international
financial reform. But none of this will help poor Argentina. The mistakes it
has made and the ill luck it has endured are bygones.
In framing a new policy, the Argentine authorities must recognise the reality
of default. Once the debt has been restructured, the budget will have to be
balanced, because the government has run out of credit. Again, once the maximum
of politically feasible pain has been imposed on residents, the rest of it must
logically be borne by foreign creditors. Policy must also restore growth. This
almost certainly involves a devaluation, whether by floating or by a one-off
devaluation, followed by dollarisation. Last, all this must be achieved without
throwing away monetary stability again.
Argentina offers a lesson as to the
dangers of heroic adherence to inflexible policies. It is one that the world
must now learn. But the country is largely on its own in finding an escape from
the wreckage.
* Speech to the Federal Reserve Bank,
New York, November 16 2001, http://www.hm-treasury .gov.uk
** International Financial Architecture for 2002: A New Approach to Sovereign
Debt Restructuring, November 26 2001, www.imf.org
*** Perspectives on External Financial Crises, December 10 2001, www.iie.com
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To learn more:
http://www.stern.nyu.edu/News/news/2001/december/ft1205.html