Could BRICS rescue Argentina’s economy?

Buenos Aires, Argentina – Patricia Bullrich works the crowd. Speaking to representatives of more than 600 companies at the 2023 AmCham summit in Buenos Aires, the former left-wing rebel fighter and current right-wing presidential candidate acknowledges she would be just an electoral “option” in more stable times.

But these are not stable times in Argentina – not with inflation over 100 percent and poverty hovering close to 40 percent.

Bullrich says her “character and determination” could save a country struggling with a $44.5 billion debt to the International Monetary Fund (IMF) and a once-in-a-century drought that has crippled its soy and wheat production. has halved. . Under these circumstances, would a Bullrich administration embrace membership in the BRICS – an alliance that is an acronym for US adversaries Russia and China, along with Brazil, India and South Africa?

“We are not going BRICS,” she says during a Q&A at the summit, adding that her geopolitical allies would be the “democracies” of the United States, Western Europe and Israel.

Buenos Aires mayor Horacio Rodriguez Larreta, another leading candidate for president of the same center-right Juntos por el Cambio (Together for Change) coalition, made similar remarks to the AmCham crowd this month, but said he would be willing to trade with any country. including those in BRICS.

Yet whoever wins October’s presidential election may not have the luxury of pursuing his political beliefs in an increasingly multipolar world.

Argentina is facing its worst economic crisis since the depression from 1998 to 2002, when unemployment rose above 20 percent and more than half of the population fell below the poverty line. President Alberto Fernandez of the centre-left Frente de Todos (Everyone’s Front) coalition has already announced he will not seek a second term, while his vice president, Cristina Fernandez de Kirchner, has declined to run after a controversial fraud conviction.

Last June, during a video conference with BRICS representatives and heads of state on behalf of Argentina, Fernandez asked for full membership of the group. More recently, Brazilian President Luiz Inacio pledged to help “remove” Lula da Silva. [the IMF’s] knife from Argentina’s neck”.

Whether the South American nation will eventually join BRICS remains an open question, though it is unlikely before the October elections. There is also no guarantee that membership would move the needle. What is clear is that Argentina can use all the help.

“When you’re in the opposition, you’re free to say whatever you want,” Vicky Murillo, director of the Institute of Latin American Studies at Columbia University in New York City, told Al Jazeera. “But if either coalition wins, the next government will have to keep a close eye on Brazil and China. Those relationships are too important to make ideological distinctions.”

Emerging markets

BRICS (then BRIC), coined by a Goldman Sachs analyst in 2001, is an acronym used to describe some of the largest emerging markets in the world. The countries held their first diplomatic summit in Yekaterinburg, Russia, in 2009, and the nascent bloc added South Africa the following year.

BRICS, representing more than 40 percent of the world’s population, was conceived as a counterbalance to the G7 countries that have long dominated the global economy and its financial institutions. To that end, the bloc founded the New Development Bank at its sixth annual summit in Fortaleza, Brazil, in 2014.

“The basic logic of the New Development Bank is to have an alternative financing mechanism that emphasizes the needs of developing countries rather than rich countries,” said Andres Arauz, a senior research fellow at the Center for Economic and Policy Research in Washington, DC, and a former Ecuadorian Minister of Knowledge.

“While the targets are ambitious, the NDB only has about $12 billion to distribute among member states,” he told Al Jazeera. “But the BRICS themselves have trillions of dollars in reserves and plenty of liquidity available to help Argentina refinance its debt.”

To understand why Argentina is pursuing a closer relationship with BRICS, one need look no further than the latest loan from the IMF. In 2018, the fund provided a record $57 billion to the right-wing government of then-President Mauricio Macri.

But instead of rebuilding Argentina’s crumbling infrastructure, that money was largely used to finance capital flight – a violation of the IMF’s statutes. The economy stalled, inflation rose to more than 50 percent in 2019 and voters ended Macri’s presidency after one term. His successor, Alberto Fernandez, canceled the last tranche of the loan, but his administration failed to stem the bleeding.

The COVID-19 pandemic, a costly war in Ukraine and this year’s historic drought have all contributed to the election prospects of the Juntos por el Cambio candidates, as well as that of La Libertad Avanza’s (Freedom Advances) Javier Milei – a political outsider who has proposed dollarizing the Argentine economy.

“BRICS has the capacity to redefine Argentina’s relationship with debt,” Julio Gambina, an economist and professor at Argentina’s National University of Rosario, told Al Jazeera. “Its investments could enable the country to build a community economy that prioritizes the needs of people and families rather than transnational corporations. But this is still a theory.”

Argentina’s potential entry into the BRICS is hampered by its history of entering and later exiting international alliances, said Juan Gabriel Tokatlian, a professor of international relations at Torcuato Di Tella University in Buenos Aires.

In 1973, Argentina joined the Non-Aligned Movement — a coalition of countries that opposed the polarization of the Cold War and promoted the interests of developing countries — only to leave the group in 1991. And it was a member of the Union of South American Countries before withdrawing in 2019.

“If Argentina were allowed access to the BRICS countries and then left because a new government has a different political orientation, it would be very expensive,” Tokatlian told Al Jazeera. “At the same time, the BRICS want to make sure that new entrants stay in the bloc. So they make their own strategic calculations.”