Can the BRICS save the Argentine economy? | Business and Economic News

Buenos Aires, Argentina – Patricia Bullrich works with crowds.She is a former left-wing rebel fighter who spoke with more than 600 business representatives at the 2023 Amcham Summit in Buenos Aires. right-wing presidential candidate He admits that in more stable times, she’s just an electoral “option.”

But Argentina is not a stable era now. inflation rate Over 100% and the poverty rate is hovering near 40%.

Bullrich said her “character and determination” could be a salvation for a country in crisis. $44.5 billion in debt to the International Monetary Fund (IMF) And a once-in-a-century drought cut soybean and wheat production in half. Under these circumstances, would the Bullrich government accept membership? brick countries — U.S. adversaries Russia and China, and an acronym for Brazil, India, and South Africa, an alliance?

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

Mayor of Buenos Aires Horacio Rodriguez LarettaAnother leading presidential candidate in the same centre-right coalition Juntos Pol el Cambio (Together for Change) coalition, he made similar comments to audiences in Amcham earlier this month, but including BRICS countries. He said he was ready to trade with any country.

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

Argentina is facing its worst economic crisis since the Great Depression of 1998-2002, when unemployment exceeded 20 percent and more than half of the population fell below the poverty line.president Albert Fernandez The leader of the center-left coalition Frente de Todos (All Front) has already announced that he will not seek a second term, but the vice president: Christina Fernandez De Kirchnerwithdrew from the race following a controversial fraud conviction.

Argentina’s President Alberto Fernandez has announced that he will not seek re-election in 2023 despite being eligible for a second term. [File: Ivan Alvarado/Reuters]

Last June, in a video conference with BRICS representatives and heads of state, Fernández represented Argentina in requesting full accession to the group.More recently, the President of Brazil Luis Inacio Lula da Silva Promised to help “elimination” [the IMF’s] Knife from the Argentinian neck. ”

Whether South American countries will eventually become Join BRICS That is unlikely to happen before the October elections, but unresolved issues remain. There is also no guarantee that membership will make a difference. But what is clear is that Argentina can use whatever help it can get.

“When you’re in opposition, you can say what you want,” Vicki Murillo, director of the Latin American Institute at Columbia University in New York City, told Al Jazeera. “But if either coalition wins, the next administration will need to pay close attention to Brazil and China. Their relationship is too important to make ideological distinctions.”

emerging markets

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

With more than 40 percent of the world’s population, the BRICS were envisioned as a rival to the G7 countries that have long dominated the global economy and its financial institutions. To this end, Block established the New Development Bank in 2014 during the 6th Annual Summit in Fortaleza, Brazil.

“The logic behind the creation of the new development bank is to have an alternative financing mechanism that focuses on the needs of developing countries rather than those of rich countries,” said Andrés Arauz, senior fellow at the Center for Economic Policy Research in Washington. . DC, former Minister of Knowledge of Ecuador.

“The target is ambitious, but the NDB only has about $12 billion available to allocate to member countries,” he told Al Jazeera. “But the BRICS countries themselves have trillions of dollars of foreign currency and a lot of liquidity available to help refinance Argentina’s debt.”

To understand why Argentina has pursued a closer relationship with the BRICS, you needn’t look at the latest loan from the IMF. In 2018, the fund provided a record $57 billion to the then president’s right-wing administration. Mauricio Macri.

But rather than rebuilding Argentina’s crumbling infrastructure, the money was primarily used to finance a capital flight. This violates IMF rules. With the economy stalling and inflation rising to more than 50% in 2019, voters ended Macri’s presidency after a single term. His replacement, Alberto Fernandez, canceled the last part of the loan, but the administration failed to stop the bleeding.

the COVID-19 pandemic, Costly war in Ukraine and this year’s historic drought All of this is due to the election of the candidate Juntos Por El Cambio and Javier Milay of La Libertad Avanza (Freedom Advances), a political outsider who proposes to dollarize the Argentine economy. has helped increase the chances of

“The BRICS have the power to redefine the relationship between Argentina and debt,” Julio Gambina, an economist and professor at the National University of Rosario in Argentina, told Al Jazeera. “The investment will enable the country to build a community economy that prioritizes the needs of people and families over multinational corporations.

Juan Gabriel Tocatrian, Professor of International Relations at Torquato di Terra University in Buenos Aires, said Argentina’s history of joining and subsequently leaving international alliances has hampered Argentina’s possible membership of the BRICS. rice field.

In 1973, Argentina joined the Non-Aligned Movement, a coalition of nations opposing Cold War-era polarization and promoting the interests of developing countries, but left in 1991. South American countries before they seceded in 2019.

“Even if Argentina were to join the BRICS, it would be very expensive if they were to drop out because their governments have different political orientations,” Tokatrian told Al Jazeera. . “At the same time, the BRICS countries want to ensure that new entrants to the bloc remain. So they are doing their own strategic calculations.”

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