BUENOS AIRES — In a stack of Argentine newspaper clippings on Domingo Cavallo's first four years as economy minister, what stands out is his headline-grabbing propensity for controversy and conflict.
Examples:
In December, 1991, Cavallo blasted the rector of the University of Buenos Aires, declaring that the institution was "very badly managed" with "astonishing waste." The rector counterattacked in a public letter he titled "Liar Cavallo."
In October, 1993, two Supreme Court justices filed suits against Cavallo for libel and slander after he called them "corrupt and thieves" in a dispute over lawyers' claims against the Central Bank.
Last August, he opened fire on Argentina's newspapers, accusing them of publishing "more than 50 lies every day."
Many critics have called the balding, sharp-eyed minister overbearing and authoritarian. Cavallo, of course, disagrees.
"I am very straightforward, but that doesn't mean authoritarian," he said in his Buenos Aires office, next door to the presidential palace. "In any case, I would say I am a fighter."
He certainly never hesitates to fight for the free-market policies he has followed to conquer Argentina's once-rampant inflation, privatize government-run corporations, trim bloated government budgets and fuel rapid economic growth. Cavallo points out that in the past four years, the economy has expanded 32%. Inflation last year was less than 4%--the lowest in Latin America--compared to 2,300% in 1990. Among a welter of Latin American success stories in the mid-1990s, Argentina's stands out.
Cavallo laments that unemployment has risen to 14% but blames the Congress for not passing a labor reform bill to cut employers' costs and encourage more hiring.
No one doubts that the hard-charging, 48-year-old economy minister is one of President Carlos Menem's most valuable assets in his bid for reelection this May. Menem has repeatedly defended Cavallo in moments of controversy.
"Never has the Argentine Republic had a minister of economy like Domingo Cavallo," Menem told reporters last year. "There could have been an equal one, but never a better one."
Asked about Cavallo's proclivity for controversy, Menem said: "Lukewarm or cold ministers I don't need."
When Menem took office in 1989, he appointed Cavallo as foreign minister. While the Harvard-trained economist wore a diplomatic hat, the Argentine economy suffered withering bouts of super-stagflation. In early 1991, Menem switched Cavallo to the economic portfolio.
Bingo. Within months, inflation was under control and the economy was growing at a healthy rate.
Cavallo's bold "convertibility plan" essentially gives Argentina two currencies, the peso and the dollar. All pesos in circulation must be backed by dollars or other hard currency reserves, and everyone is entitled to exchange pesos for dollars at a one-to-one rate.
That, according to Cavallo, means that in Argentina there can be no sudden devaluation like the one that threw Mexico's economy into chaos in December. Although prices and unemployment have risen under the Cavallo plan, most Argentines seem content with the stability and economic expansion it has brought.
Still, there is controversy. Unions decry Cavallo's efforts to reform labor law. Farmers complain bitterly that exchange rates slash their profit margins on exports. Retired people demonstrate outside Cavallo's apartment house, protesting his refusal to raise social security pensions.
The protests hurt. He complains that the controversy upsets his parents, who live outside the capital.
"They suffer a lot," he said. "This whole thing of disputes, the criticism one receives, the attacks, the fact that on Wednesdays a group of 10 retirees and 20 cameramen go and demonstrate in front of my house--all that scares them a little."
Cavallo's mother came to Argentina with her Italian parents at age 2. His father, the son of Italian immigrants, made and sold brooms in a modest shop in the Cordoba town of San Francisco, where the future minister was born and reared.
He studied accounting at the University of Cordoba and received a doctorate in economics there in 1969. During the next six years, Cavallo taught at the university, held various provincial posts and worked as a business consultant. Then he went to the United States with a Ford Foundation fellowship for graduate economic studies at Harvard University, where he received his Ph.D. in 1977.
On returning to Cordoba in 1977, Cavallo became director of a newly created Institute for Economic Studies. The institute is part of the Mediterranean Foundation, a Cordoba think tank financed by private business.
By the early 1980s, Cavallo had built a national reputation. In 1982, while Argentina was ruled by a military regime, he served as chairman of the Central Bank for 53 days. The Argentine private sector was in crisis. Unable to pay their dollar debts, businesses and banks demanded that the government help.
