Washington Prowler

Shelby Dance?

Democrats dream of a new Jeffords. Also: Recriminations -- a hemispheric case study.

By 6.5.02

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ITCHING FOR A SWITCH
Democratic senators and the Democratic National Committee have been telling Capitol Hill reporters that they expect Alabama Republican Sen. Richard Shelby to switch parties if the Senate remains in Democratic hands after the mid-term elections. "He's fed up with Bush and the Republican bungling in the Senate," says a Democratic leadership staffer, who claims that the party leadership has met with Shelby on the subject of jumping back to the party in which he was originally elected to the Senate. Shelby switched to the GOP after its big congressional wins in 1994.

"There is absolutely no truth to that," says a Shelby staffer about the switch-back talk. "Senator Shelby has never discussed jumping parties. He decision to switch parties [in 1994] was based on ideological beliefs and values and was approved of by his constituents. He's not going to change parties again simply because of politics or perceived politics."

Another Democratic staffer on the Senate Intelligence Committee believes that Shelby wouldn't jump parties, and chalks the talk up to Democrats simply making mischief with a Republican Party that is in a bit of turmoil leading into the election season. Republicans in the Senate are unhappy with their leadership, and sense that they are missing a golden opportunity to take back their chamber, even with weakened Democrats like Paul Wellstone of Minnesota, Tim Johnson of South Dakota and Jeanne Carnahan of Missouri facing tough re-election battles.

"It's just another way the Democrats are creating doubt in the Republicans. It's gamesmanship," says the intelligence staffer. "They know they can goose them on this kind of stuff and get a rise out of them."

GAUCHO RECRIMINATIONS
After this, America's heads of the FBI, CIA and other agencies may be relieved to know they don't live in Argentina. Or to take it one step further: Would the rock star Bono want to have anything to do with the man in question?

Late last week, the U.S. Treasury Department and the White House received word that former Argentine economics minister Domingo Cavallo was to be released from prison within days. Cavallo was credited with creating Argentina's currency board in 1991, and instituting a convertibility law, which fixed the peso one to one with the U.S. dollar. The convertibility law ended years of spiraling inflation, and created a level of prosperity unseen in Argentina for many years, including a fast-growing middle class. Cavallo left office in 1996, but the Harvard-trained economist was brought back to serve as economics minister in March 2001, as unemployment and the national debt began to skyrocket and exporters complained of an inability to trade competitively the world market.

But he was unable to halt the 32-month recession, couldn't stop runaway government spending and the IMF refused to back his austerity plan. He resigned last December amid public protests over his decision to freeze bank accounts to stop a run on banks.

Cavallo was subsequently arrested and accused of signing off an arms smuggling scheme that sent weapons to Ecuador and Croatia. Cavallo's old ally and boss, former Argentine president Carlos Saul Menem, was held under house arrest for more than five months in 2001 on charges related to the same arms deal, but he was released by a Supreme Court that includes one of his former law partners and several other Peronist political allies. "It's not clear that Cavallo knew anything about the arms trade," says a Treasury Department source. "This is a man who dealt with the U.S. for many years, and he dealt with us fairly. He's a respected academic."

The U.S. State Department and Treasury had made it clear they believed that Cavallo was being held unfairly, essentially to calm an angry Argentine public unhappy with a weakening economy and political unrest. The U.S. was quietly lobbying for the economist's release. But if Cavallo is released, his problems aren't over. He is also facing a number of charges related to gold smuggling in the 1990s as well as questions about a debt swap last June, which reduced the country's debt-service by a mere $12 billion between 2001 and 2005 in exchange for increasing it by $66 billion in 2006.

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