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A cable from February 2009, reveals that Domingo Cavallo*, a key player in the 2001 Argentinian collapse, was expressing to the US side his desire to see the IMF return to Argentina. He was also expressing his desire to see the Kirchner administration 'replaced' before 2011, apparently by a more friendly-to-IMF administration.





The comment at the end of the cable reveals that the US side was acknowledging that Cavallo had zero credibility in Argentina as he “also is far from being free from blame for the economic troubles Argentina has endured of the last decade”.





However, at the end of the comment the US side indirectly gives the impression that Cavallo could be proved useful to some extent as “there is also a growing chorus that agrees with him that the best available solution to Argentina's predicament is to make right with the IMF.”





Key parts:





The post-crisis Kirchner model no longer works and Argentina is headed for "stagflation," according to controversial Argentine ex-Economy Minister Domingo Cavallo. During a meeting with the Ambassador, Cavallo suggested that returning to the IMF may be the only way to alleviate Argentina's problems, and noted the only reason for optimism is that the Kirchners are in decline and their successors are sure to do a better job. He said Peronist party leaders were already considering alternatives to the Kirchners, and a scenario certainly exists that has the Kirchners leaving office prior to 2011. Cavallo's worries about the economy and likely increase in social tension were interspersed with arguments justifying his own pre-2001 collapse decisions and blaming the 2002 pesification decrees for much of Argentina's current predicament. Cavallo also recommended the USG use the G-20 discussions to moderate the Kirchners' economic policies.





So, the GoA needs financing, but "will not follow the world's rules to get it," said Cavallo. He called it "crazy" that the GoA could not negotiate a debt restructuring deal with the Paris Club just because it refused to submit to the requirement of having a current IMF program.





The clear solution, he claimed, is to do what many other countries with easy access to IMF lending are doing. However, Argentina is not even submitting to Article IV consultations because it refuses to acknowledge that national statistics agency INDEC is tampering with inflation statistics. In television interviews, Cavallo emphasizes this point, arguing that the GoA does not want to admit that INDEC is lying about the real level of inflation, "but every Argentine knows that INDEC is lying, so the government should just admit that INDEC was lying but won't anymore."





Despite his pessimistic outlook for the economy, Cavallo is optimistic that the administration that follows the Kirchners will act quickly to reintegrate Argentina into the world.





Amidst expressing concerns about the economy and the potential for social unrest, Cavallo provided justifications for his own actions in 2001 leading up to the December 2001 financial crisis and sovereign default. He blamed much of the crisis on "as series of errors committed by the IMF," culminating in the Fund's decision not to disburse the tranche scheduled for November 2001 ("at a time when the U.S. was distracted with 9/11").





Comment:





Cavallo remains a polarizing personality in Argentina, and has limited influence or presence in the country at the moment. He also is far from being free from blame for the economic troubles Argentina has endured of the last decade. Therefore, his criticisms of the current governments policies tend to lack credibility with some Argentine audiences. Nevertheless, many of his comments on the economy seem to ring true, from Post's perspective, and there is also a growing chorus that agrees with him that the best available solution to Argentina's predicament is to make right with the IMF.





Full cable:









So, here we are. Cavallo's dream eventually becomes true. IMF mafia invades for a second time in Argentina, after another neoliberal government under Washington puppet, Mauricio Macri, sets the preconditions through the common policies of neoliberal destruction.





As Michael Hudson pointed out





The neoliberal policy has its aim rolling back any of the wage increases in employment that Mrs. Kirschner, the former president, implied, as part of the class war. So, in order to shrink the economy, you have to basically cut back business, cut back employment. And so, the purpose of the IMF loan was to enable the wealthy Argentinians, the oligarchy that’s run the country for a century, to get all its money out and run.





What Macri has done, is they agree with the IMF to wage class war with a vengeance, devaluation, leaving Argentina so hopelessly indebted that it can’t possibly repay the IMF loan. So, what we’re seeing is a replay of what happened in 2001.













* Domingo Felipe "Mingo" Cavallo is an Argentine economist and politician. He has a track record of public service and is known for implementing the Convertibilidad plan, which fixed the dollar-peso exchange rate at 1:1 between 1991 and 2001. This brought the Argentine inflation rate down from over 1,300% in 1990 to less than 20% in 1992 and nearly to zero during the rest of the 1990s. Guided by his politics, Argentina entered into one of the most difficult crisis in its history. He is also well known for implementing the corralito, which restrained Argentine citizens from withdrawing money from their bank accounts. This was followed by the December 2001 riots and the fall of President Fernando de la Rúa. In 2015, he was sentenced for embezzlement, following an appeal. A definitive sentence still awaits.



