Who is Domingo Cavallo?
and 1983 a Military Junta forcibly seized power in Argentina. These
eight years of dictatorship, characterized by bloody repression, ended
with 30,000 disappeared people, thousands of prisoners,
and a society changed forever. But the dictatorship also brought about
less-known changes in the countrys economic structure. To start
with, the external debt almost quadrupled, rising from 12 billion
in 1978 to 43 billion dollars in 1982. At the end of this government,
Domingo Cavallo became Director of the Central Bank of Argentina
(Banco Central de la República Argentina), where he implemented
financial policies that allowed Argentinas main private enterprises
to transfer their debts to the state, transforming their private debt
into public obligations to be paid by the Argentine people. In 1983,
more than 200 firms (30 economic groups and 106 transnational enterprises)
transferred great part of their 17 billion-dollar debt to the Argentine
society, thanks to secured exchange rates, which Domingo Cavallo put
into practice in the early 1980s. This mechanism turning private debt
into liabilities of the state continued throughout the Government
of Raúl Alfonsín (1983-1989).
In 1989 Carlos
Saúl Menem was elected President of Argentina, and he governed
until 1999. His presidential terms were characterized by high corruption.
Between 1989 and 1991, Domingo Cavallo was the Minister
of Foreign Relations. In 1991, he was appointed Minister of
Economy (a post he held until July 1996). He implemented the famous
convertibility plan that pegged the peso argentino to
the dollar. During this period Cavallo promoted the privatization
of Argentinas public enterprises in a highly irregular process.
These companies were sold for ridiculously low prices in comparison
with their real value, and it has been proved since that the sales
procedures were ridden with corruption. Moreover, the regulatory frames
imposed on the privatized enterprises are weak and therefore completely
unfavorable to the customers of these firms. Because of these policies
approved under Cavallos leadership, the privatized enterprises
have obtained extraordinary profits amounting to more than 9 billion
dollars until late 2000. In addition, these firms contributed to the
rise in unemployment, firing 7 out of 10 of their employees.
In 1999 Fernando
de la Rúa was elected President of Argentina. Cavallo,
who had been elected Congress Representative for the City of Buenos
Aires in 1997, was appointed Minister of Economy once again
in March 2001. The Argentine Congress granted him "extraordinary
powers," and he promised to solve the economic crisis and to
take Argentina out of the longest economic recession in its history.
To 'balance' the public accounts, he reduced the already low salaries
of the public sector (which produced a decrease of wages in the private
sector as well). This policy of contraction worsened an already serious
economic recession. In the legislative elections of October 2001,
the majority of the population showed its rejection of these policies,
voting against De la Rúas political party. In December,
in the middle of a critical political and economic situation, worsened
by the interventions of international organizations such as the IMF,
the unemployment rate rose to 18.3%. This situation prompted popular
uprisings and riots against the government. Because of their inability
to understand or to solve the situation, De la Rúa and his
officers, among them Cavallo, had to resign.
Today, Cavallo cannot walk freely in Argentina because people consider
him directly responsible for some of the most harmful economic
policies in recent history. We deeply regret that serious academic institutions
such as Columbia University and New York University still consider that
he has the moral authority to share a panel with renowned specialists
who aim at analyzing the Argentine crisis from a serious perspective.
* This text
was part of the escrache that students
made to Cavallo at Columbia University during a conference
entitled Argentinean Economic Crisis and Its Implications for Emerging