POLITICS-ARGENTINA: Cavallo – a De Facto ‘Prime Minister’?

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Mar 30 2001 (IPS) - The swearing-in of prominent right- wing economist Domingo Cavallo as the economy minister of Argentina’s centre-left government has given rise to a threat of a crisis of political legitimacy, despite the fact that the risk of the country defaulting on its debt servicing payments is evaporating.

The weakness of President Fernando de la Rúa has been evident virtually since the start of his term 15 months ago, although it was accentuated after his vice-president and junior coalition partner Carlos Alvarez resigned last October.

Today, with the arrival of Cavallo – the architect of Argentina’s currency board system, which reined in four-digit runaway inflation – the president has been relegated to the backseat.

Some analysts suggest that the crisis could be overcome by the creation of a new coalition – led by Cavallo himself as a sort of de facto “prime minister” – of which Alvarez’s centre-left Frente País Solidario (Frepaso) would continue to form part, although with a few vacancies left by those officials and lawmakers who would refuse to join in.

The new coalition would help fill the “power vacuum” observed by political and economic analysts over the past six months. Rudiger Dornbusch, a professor of economy at the Massachussets Institute of Technology, said in November that De la Rúa, of the centrist Radical Civic Union (UCR), was “a Sunday afternoon president.”

“At this point in time, Cavallo is the only one with true leadership capacity, and although the regime is still formally presidential in nature, we are seeing the emergence of a sort of ‘prime minister’ who is setting up his own government,” University of Buenos Aires professor of sociology Marcos Novaro told IPS.

In Novaro’s view, the forces of the governing Alliance must find a way to adapt to the new situation, because voters – whose ideological frontiers are more flexible than those of the country’s political leaders – have been won over by a minister who works round-the-clock, and does not hesitate to take hard decisions at a time of crisis.

Novaro, author of the book “Politics and Power in the Government of Menem”, said the “progressive” factions in the centre-left Alliance could accept a new role as “Cavallo’s left” – a slight improvement over their position as “De la Rúa’s left”, which, he said, has failed to bring them the slightest satisfaction.

According to the analyst, De la Rúa “has already failed,” and it is “absolutely hilarious” to think, as some of the president’s cronies have indicated, that he could bounce back and eventually be reelected.

“His government and his coalition have fallen apart, and the best thing now would be for him to accept his secondary role, and not try to recover, because if Cavallo gets fed up and leaves, what would be left is a non-existent government,” argued Novaro.

The parties comprising the governing Alliance suffered a major setback when Cavallo was recently invited to join the government, in a move that clearly revealed the De la Rúa administration’s inability to overcome the profound economic crisis shaking Argentina.

Cavallo’s designation as economy minister forced the parties to realign themselves yet again.

Over the past week, parliament’s swift approval of an initiative by Cavallo granting the executive branch special powers at this time of crisis made it clear that the government’s political incapacity was widely recognised, while it deepened the injuries sustained all along the political spectrum, but especially in the ranks of the ruling Alliance.

The head of the UCR, former president Raúl Alfonsín (1983-89), said Thursday that “thus far” Cavallo had stuck to the Alliance’s programme.

Although there are people in the UCR opposed to the incorporation of Cavallo, who served as economy minister under the Justice (Peronist) Party government of Carlos Menem (1989-99), the party leadership has apparently taken a wait-and-see stance.

Novaro said Alfonsín’s remark could anticipate a decision by the UCR to remain in the Alliance. The former president said that “deviations to the right have not yet been observed” in the announcements by the economy minister, who was adopting vigorous policies designed to get the economy back on track.

In the meantime, Frepaso – an umbrella grouping of centre and left parties – is expected to break up, after a group of 11 legislators called on supporters to take part in a debate Saturday to decide what direction the party should take.

Novaro said it was “very probable” that the government would lose a sector of Frepaso in the shake-up. But as a possible solution to the crisis, he recommended “forcing” a split in the centre-left party that would allow those who remained to regroup within the new political map taking shape around the central figure of Cavallo.

Cavallo, who captured just eight percent of the vote in the 1999 presidential elections, was urgently called on to join the government at the height of Argentina’s ongoing economic crisis, and in less than 10 days secured the legislative support that De la Rúa failed to obtain in 15 months in office.

The Argentine economy has not grown in nearly three years, unemployment has hovered around 15 percent for years, and the cost of public credit is being driven up by the recession and the lack of investor confidence in the country’s future.

In his first five days as economy minister, Cavallo flew to Brazil to announce his decision to bring about a modification of the Southern Common Market (Mercosur) trade bloc’s common foreign tariff; won the backing of Spanish Prime Minister José Maria Aznar; negotiated fresh credit; announced hard-hitting measures; and earned the nearly unanimous support of Congress.

Cavallo’s image as a “saviour” who can expertly and resolutely tackle severe crises like the hyperinflation he tamed in the early 1990s gives the new minister the political and social support base that not only had the government failed to win, but Cavallo himself had failed to earn when he ran as presidential candidate.

The weakness of the Alliance, added to De la Rúa’s difficulities in assuming the leadership of the coalition, has helped make Cavallo the political figure of the moment, and the leader enjoying the highest credibility in the eyes of the public.

“After 15 months of De la Rúa, people needed to see a resolute leader, someone who was determined to govern,” said Novaro.

Surveys carried out over the past two weeks by the polling firms Mora y Araujo, Analogías, Equis and Hugo Haime indicate that support for Cavallo, which was low just a few months ago, has soared to between 50 and 59 percent of respondents amidst the current crisis.

Journalist Mario Wainfeld wrote in the centre-left daily Página 12 that Cavallo had taught “his passive colleagues a lesson in politics, communication and leadership.”

The reporter stressed the minister’s capacity to talk “to real people” about the “real economy” – an allusion to the return of terms like companies, production, exports, taxes, import duties and employment, instead of the euphemistic “markets” with which De la Rúa’s former economy ministers had referred to the volatile financial markets, converting them into “monsters” lying in wait.

The new minister, meanwhile, hogs the limelight as he talks to reporters, bankers and members of the various sectors of the business community, addresses “the unemployed” looking straight into the TV cameras, travels here and there, presents the members of his team and announces his new measures bit by bit.

President De la Rúa, meanwhile, has limited his appearances to the swearing-in ceremonies of new government officials and other acts of protocol.

Vice-rector of the public University of Buenos Aires, Atilio Borón, a sociologist, described De la Rúa’s role as that of “a classic president of a European country with a parliamentary tradition, where the real power is concentrated in the figure of the prime minister – in this case, the economy minister.”

Cavallo has already told his economic team not to expect him to coordinate things in the economic arena, because he will have to focus on the political front.

“Consult me as little as possible,” he told them, while recommending that his deputy minister Daniel Marx take charge of negotiations with creditors himself.

In Borón’s view, what is occurring is “grave,” because it indicates “a marked deterioration of the representativeness of democracy.

“Argentinians’ disenchantment with their democracy cannot become any more profound now that the Alliance has backed out and handed the government over to someone who did not win the elections,” he said.

“The president who was elected by a majority of voters has been eclipsed, and the paradox is that a candidate who won less than 10 percent of the votes in the election and who is, moreover, responsible for the current economic juncture has now emerged as the messiah,” said Borón.

The consensus is that Cavallo wants to be president, and the members of the governing coalition have decided to take a wait-and-see attitude regarding the ideological slant of his actions. De la Rúa, meanwhile, went so far as to describe his new economy minister’s measures Thursday as “centre-left.”