Domingo Cavallo
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Domingo Felipe Cavallo is an Argentine economist and politician. He has a long history of public service and is better known for the Convertibilidad plan that created a currency board that fixed the dollar-peso exchange rate at 1:1.
He was born on July 21, 1946 in the city of San Francisco, Córdoba Province, Argentina. 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).
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, Undersecretary of Interior of the national government and President of the Central Bank of Argentina (1982).
Notwithstanding this collaboration, when democracy returned in 1983 he became a close economic advisor to Peronist chieftain José Manuel de la Sota and was elected as a Peronist deputy for Córdoba in the 1987 national polls. Based on the Fundación Mediterránea thinktank, 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), investing his prestige in academic and policy-making circles worldwide to ridicule incumbent president Alfonsín's efforts to control hyperinflation.
As Menem chose to deliver the Economy Ministry to 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.
Cavallo's masterpiece was the Convertibilidad plan, which created a currency board that fixed the dollar-peso exchange rate at 1 peso per dollar, being able to sustain it because of the influx of funds that the Bonex plan brought into the State coffers, through the mandatory subscription of long term bonds to all bank depositors. Cavallo had full success on curbing inflation and he also had made some progress opening new prospects for foreign investment in Argentina through massive privatization. However, he was unable to persuade Menem to deepen the reforms of the public employment and to attack the provinces mounting deficit. In 1995, Menem pushed towards a Constitutional change that allowed him to be reelected and he needed pork barrel measures to gather the enthusiasm of Peronist governors. This facts, and a feud between them on the "fatherhood" of the Convertibilidad forced Cavallo to resign in 1996. He went on founding the next year a political party, "Acción por la República", which allowed him to return to Congress, this time as a Deputy for Buenos Aires city.
In 2001, Cavallo was called by President Fernando 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 IMF, but the growing country risk and the evidence that the political opposition wouldn't allow him to push further austerity measures led to a massive capital drain from the country. In November 2001, Cavallo introduced a set of measures that blocked the usage of cash, known as "Corralito". 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, finally decreeing the end of the Convertibilidad and the inevitable collapse of the Argentine currency.
Cavallo is currently Robert Kennedy Visiting Professor in Latin American Studies at the Department of Economics of Harvard University.
See also
External links
- Personal homepage (http://www.cavallo.com.ar/) (in Spanish and English)de:Domingo Cavallo