Buenos Aires Times

argentina FORMER ECONOMY MINISTER

Cavallo rises from ashes to haunt a gov’t in crisis

The alleged meeting between Macri and Cavallo — denied by both parties — returned the economist to the fore just as the dollar was soaring and amid the ongoing social tension over successive increases in utility prices.

Saturday 12 May, 2018
Economist Domingo Cavallo was Economy minister during Argentina’s 2000-1 financial crisis.
Economist Domingo Cavallo was Economy minister during Argentina’s 2000-1 financial crisis. Foto:NOTICIAS ARGENTINAS

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Domingo Cavallo is in fashion. Rumours of the former Economy minister’s return to the public spotlight recently became reality. First he started a blog, then he published a book. And all of a sudden, he was on television giving advice for an economy in trouble.

The alleged meeting between President Mauricio Macri and Cavallo — denied by both parties — returned the economist to the fore just as the dollar was soaring and amid the ongoing social tension over successive increases in utility prices. Cavallo — who was Economy minister under presidents Carlos Menem and Fernando de la Rúa — remerges at a sensitive time. But with no self-criticism and with the intuition that he has lots of good advice to give.

On April 26, rumours began circulating on Twitter that quickly became a reality.“Had Cavallo met with Macri?”, social media users pondered. Dozens of sources denied it but the name of the man responsible for the corralito financial crisis in the early 2000s was back.

“It (the meeting) has been invented entirely for people to attack him (Macri) and me”, Cavallo said, adding that he had simply sent his book “to the President and his entire team”.

“The last time I saw Macri was four years ago, outside my office on Tagle street”. Officials close to the President laughed at the rumour and gave it no credence. However, the damage was already done. The former Economy minister is a stain on Argentine history which almost everybody would prefer to ignore.

While allies of the former Kirchner governments accuse Macri and his team of seeking Cavallo’s advice, the other side pulls out old photos of the economist with former presidents Néstor and Cristina Kirchner and statements by Cristina once praising him. What is certain is that a disciple of Cavallo’s, Central Bank chief Federico Sturzenegger, meets with him regularly. In fact, in September 2017 an image went viral of Cavallo walking into the Bank. “I hold Sturzenegger in high regard but I do not advise him. Actually, I usually criticise him,” Cavallo said.

The last time Cavallo was in the news was in 2014 when he tried to make a presentation at the Catholic University of Argentina (UCA) but was interrupted by protesters who threw eggs at him. Cavallo was forced to hide under a table.

Rising from the ashes, the economist sat down in the Todo Noticias studios on May 2 for an interview on the A Dos Voces programme. There, he discussed his new book “The Economic History of Argentina”, written with his daughter, which includes criticisms of almost everybody except himself. Not even the corralito was his fault, Cavallo insists. “It was not a mistake. What people experienced was the Duhalde’s ‘pesification’ of the economy on the advice of (economist) José Ignacio De Mendiguren”, he claims.

De Mendiguren is currently a congressman for the Peronist dissident bloc Renewal Front. “It makes me truly proud because he (Cavallo) and his team were proposing the ’dollarisation’. Imagine if we had lost that battle and Argentina were dollarised and with its Bank in foreign hands”, De Mendiguren told this journalist in an interview. “That is how the Ecuadorians got emptied out”.

‘HE NEEDS A TEAM’

“Macri cannot be his own Economy minister. Néstor Kirchner made that mistake”, Cavallo claimed last week, letting his fangs show. With the dollar filling front pages and the Treasurer Nicolás Dujovne juggling his words after revelations in Noticias magazine (tax evasion before becoming minister) and the Perfil newspaper (that he billed the State for private flights and dinner parties), Cavallo was looking to give them the final blow: he accused them of not “having a team”.

“You need a minister who knows history, who has experience and understands the economy generally”, he charged. “Menem would have never fought for power with me, nor me with him”.

The man responsible for the corralito went further: “They need a strong ministry which includes Economy, Finance, Production, Energy and Agriculture”.

TN’s ratings failed to beat its main rival’s, C5N, but Cavallo’s statements reverberated across the media. And as if it were destiny, the next day the dollar jumped two pesos to end the day at 23 pesos. “He’s going to retreat”, say members of Cavallo’s inner circle. His next public appearance will take place in May during a G30 meeting among bankers, former central bank governors and economy ministers of the world’s richest countries. Cavallo is the only Argentine in a group presided over by former Federal Reserve chief Paul Volcker. Sturzenegger will be the event’s host. The government will be hoping the storm has passed by then.

The former Economy minister has brushed off the dust and gotten the nerve to remerge. “For the good of Argentina, make the most of my experience”, Cavallo insists.

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