Carlos Menem is sworn in by his Prime Minister of Economy, Miguel Roig, in July 1989.
“Carlos, we can meet Jorge Born in La Rioja”, was the sentence of Julio Bárbaro to Carlos Menem. It was mid-1988.
“I’m interested, let’s move on.”
Menem was a presidential candidate for Peronism. He was about to set foot on the plane to go to Europe, to meet Helmut Kohl, François Mitterrand and Felipe González. Bárbaro had just met an executive from Bunge & Born, the most important Argentine business group.
If there is a Christmas in the Bunge & Born plan, it is in the year 1988, before the presidential elections of May 1989. And it was celebrated with a meeting between Pedro Sebess, director of Bunge & Born, and Bárbaro, at the Idea Colloquium.
“We were at the Panamericano Hotel in Bariloche, we organized the Menem-Born meeting walking along the corridor of a hotel”remembers Barbaro. “Then we got back to talking on the plane, we sat down together,” Sebess told Economic. In that Peronist approach to the B&B there were more Sherpas than Menem, although they were responsible for other “tasks”: Julio Mera Figueroa, Juan Bautista ‘Tata’ Yofre and Luis Barrionuevo.
On the B&B side, and under Sebess, the holding’s financial coordinator, there were three people who would be key in the technical setup and implementation of the program. The brains. Nestor Rapanelli, Miguel Roig and Orlando Ferreres. The first two died. “I used to work at the B&B Chemical Company,” says Ferreres, now director of the consulting firm OJF & Asociados. He then became Deputy Economy Minister with Menem in 1989 and acted as a virtual minister when Roig died six days after he took office. Ferreres was the macroeconomist of the B&B group and the Menem plan.
“Originally the program was called the Pro Menem plan. There have been 150 measurements in 7 years. We had calculated that the total fiscal deficit, taking into account the numbers of the Central Bank and public companies, reached 23% of GDP “Ferreres reviews. “It wasn’t easy for me moving from pursuing business to immersing myself in the problems of an economy on the brink of hyperinflation“.
The B&B plan has never been publicly announced. It was a reorganization of the economy based on an econometric model that had been developed by the country’s main economic group.
Menem first met Born and then Rapanelli, who told him about the instrument they had in the companies of the group, boasting that it was something unique in the country: modeled the business cycle on the basis of 150 variables.
That econometric forecasting program was inspired by the work of Lawrence Klein, Nobel laureate in economics in 1980, for contributing to the use of econometric models in the implementation of economic policies. Klein worked at the Wharton School (University of Pennsylvania) where he directed LINK, a project that would consist of networking the best econometric models of each country. and form a kind of global megamodel to explain the behavior of the world economy. They believed it would serve to study how changes in economic policy in one country would impact the rest. Klein’s aides had even contacted Bunge & Born to “connect” with the Argentine case. Rapanelli initially refused the offer. To the fact that on the one hand it meant prestige to be part of a Nobel project, on the other it meant investing a millionaire in computers that would have been difficult to recover in the forecasting business. Ferreres convinced Miguel Roig to sell the model predictions in the city of Buenos Aires and the investment would eventually close. Bunge & Born bought two state-of-the-art machines, one Hewlett-Packard and one IBM. A couple of years later, Rapanelli spoke to Menem about the Klein model in La Rioja. He told him that the work of the Economic Studies Center of the B & B group provided the country’s best diagnosis of the macroeconomic outlook. Menem bought a turnkey board. It was either that or chaos.
“In 1989, inflation had gone from 10% per month to 196.6% per month in the last month of the Alfonsín government”Ferreres remembers. “I had a book in the office on hyperinflation that I read every day”.
Bárbaro epically justifies that step Menem took towards Bunge & Born. “It was an ideological continuity. Miguel Miranda was associated with industry and import substitution; José Ber Gelbard to aluminum and Menem had to go with Bunge & Born, a transnational group present in the entire economic structure of the country ”.
“For us – more practical, says Sebess – the key was to know the Productive Revolution proposal that Menem had made because we were a group dedicated to the internal market”.
“Doctor Menem surprised me with this call”Roig said in confirming the news. It would be the Minister of Economy. “All the Argentines called up by someone cannot deny effort within the limits of our abilities“. Roig would have hit those limits before the dollar rose. Keep on.
Ezechiele Burgo
Source: Clarin
