By Nilotpal Kant
The 15th BRICS summit witnessed the implementation of China’s “BRICS plus” initiative, which had been put forward by China in 2017.The decision to broaden the BRICS coalition by incorporating six countries is rooted in the strategic restructuring of a multipolar global landscape, which is being spearheaded by BRICS, a collective of prominent emerging economies. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE have been selected after long consultation among members, instead of China’s initial choices, which included Turkey, Mexico, Nigeria, and Indonesia.
The enlargement of BRICS indicates a dependable partnership among countries in the global south, albeit with fragile trust connections, especially between India and China, and to some extent, Brazil and the new member, Argentina. The purpose behind BRICS expansion remains unclear at this point. If the expansion is driven by concerns about the dominance of the dollar and the desire to end the old dollar-centric system, it could pose challenges because the new and old members are deeply intertwined with the dollar economy with few exceptions. However, if the expansion is motivated by market forces, it has the potential to be a successful endeavour.
Argentina is an example of a case where its inclusion in BRICS could potentially cast a negative economic outlook on the alliance. Argentina’s argument for joining BRICS faces some significant challenges, primarily stemming from the prolonged economic turmoil the country has been grappling with since 2018. Argentina’s economic woes are exemplified by its inflation rate, which exceeded 100 percent in February 2023, the highest it has been since 1991. The average inflation rate since 2018 has been a concerning 62 percent, a worrying indicator for an economy of its size, which is in the trillion-dollar range. However, Argentina retains the highest GDP among the six newly invited nations but its half decade long crisis creates some speculation over overall impact on BRICS economies after the inclusion of a failing economy.
Within the current BRICS member states, Brazil notably takes the lead as Argentina’s primary trade partner, boasting a trade volume amounting to 32.95 billion USD in the year 2022. China follows with a figure of 16 billion USD, trailed by India at 6.4 billion USD. Importantly, it’s worth noting that three out of Argentina’s top four trading associates are aligned with the BRICS coalition, making Argentina’s inclusion in the group an exceptionally fitting proposition.
In the meantime, Argentina is gearing up for elections in October 2023, and the leader of the opposition has issued a warning that they would withdraw from BRICS if they win. The two primary opposition candidates for the upcoming October elections, libertarian leader Javier Milei and right-wing candidate Patricia Bullrich, have both announced their intentions, stating that they would prevent the country from becoming a member of the group of emerging economies. Milei, who has previously stated his reluctance to engage in trade with “communist” nations, a categorization he applies to Brazil and China, has expressed his aversion to dealing with countries under left-leaning governance in general. Milei received the maximum vote among all presidential candidates in the primary presidential election.
Nonetheless, it’s clear that Argentina’s association with the IMF has been an ongoing saga. Since 1956, Argentina has engaged in 21 IMF arrangements with the IMF and has faced multiple instances of default in its history. Involvement in IMF programs hasn’t yielded a reliable solution for Argentina’s economic stability, which has motivated Argentine leaders to explore BRICS membership. Conversely, opposition leaders are sceptical about the potential benefits of BRICS in addressing Argentina’s escalating inflation and turtle growth. As a result, they are issuing threats to discontinue BRICS involvement and maintain the status quo with the IMF and the U.S. dollar, if they return to power.
Nonetheless, Argentina positioned itself as the third-largest economy in Latin America after Brazil and Mexico, which gave BRICS to consider Argentine participation and thus extended an official invitation to join the BRICS alliance, along with five other nations, at the 15th BRICS summit held in Johannesburg in August 2023. From the BRICS perspective, the incorporation of Argentina could potentially pose a challenging long-term outlook for BRICS due to the inconsistency in Argentina’s economic performance. On comparing economies of Argentina to rest of the BRICS members, the Argentine economy growth prospect is slowest for the upcoming decade.
A video meme titled ‘El dólar se va a la luna’ creatively illustrates Argentina’s economic situation by using scenes from the Apollo 13 film. In this meme, as the rocket prepares for liftoff, there’s a countdown and the flight director going through the pre-launch checklist:
“Economia” (economy)? Colleagues in mission control replies- “Estancada” (stagnant)….”Inversiones” (investment)? “Cero” (zero)…. ”Riesgo pais” (country risk)? “por los aires” (high)… “Pymes” (Small and medium enterprises)? “Fundidas” (molten)…. “Inflación” (Inflation)? “Subiendo” (up)…”Pobreza” (poverty)? 50%… “Creditos” (credits)? “Cero” (Zero)… “Finanaciamiento” (Financiang)? “Cero” (Zero)… ”Club de Paris” (Paris club)? “Aplazado” (suspended)… “Impuestos” (taxation)? “mas de 169 y contando” (more than 169 and counting) and so on.
The video meme appears pertinent in light of Argentina’s inclusion and India’s recent lunar landing. The BRICS summit coincided with India’s impressive technological display through the achievement of a soft lunar landing, showcasing the nation’s prowess in space technology. India showcased this capability following Russia’s unsuccessful landing, positioning itself among technologically advanced nations. The BRICS group is progressively evolving into a coalition of technological strength, drawing the interest of additional nations seeking technological benefits through cooperation. Meanwhile, the Argentine economy primarily focuses on agro-export and other non-technology-based industrial exports. The lack of specialization makes the Argentine economy less competitive when compared to the economies of the BRICS nations.
BRICS is encountering a Western challenge in the wake of the US-China trade conflict and sanctions against Russia in backdrop of Russia-Ukraine conflict designed to reduce the use of the US dollar in their economy. Simultaneously, India, serving as a balancing influence between Western and Eastern powers, grapples with a complex issue concerning the expansion of the BRICS alliance. For India, the dilemma within BRICS revolves around the ramifications of expansion, the geopolitics involved, and the competition among BRICS nations, notably India and China. As a result of this expansion, there is a balanced representation across various regions: Latin America (2 members), West Asia (3 members), Africa (3 members), Asia (2 members), and Russia, providing BRICS with a well-rounded global perspective. However, this enlargement also sets the stage for heightened and more pronounced geopolitical competition between India and China.
Argentina’s inclusion in BRICS could potentially hinder the alliance’s goals of ensuring sustained economic development, political stability and intensifying India-China geopolitical manoeuvrings, especially when its selection over Mexico for the purpose of regional balance might not align with this agenda. Additionally, statements from opposition leaders in Argentina, who could assume power after the election, have raised questions about extending BRICS membership to Argentina. Argentina seems to be trailing in its endeavours to decrease its reliance on the US dollar, largely because of its dependency on the IMF and the perspectives of its top leadership on this matter. However, the actualization of de-dollarization appears to be quite distant, and any Latin American country may find it challenging to directly engage with a bloc that calls for de-dollarizing its economy. This is primarily because Latin America is considered the United States’ sphere of influence, and the US is unlikely to allow such a shift to occur easily.
Author is Research Scholar in Latin American Studies, JNU.
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