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| Argentina President Albert Fernandez Image Credit: Google |
Argentina is
passing through toughest of the times the country has ever witnessed. An Economic
Crisis with the inflation rates surged 100 percent in historic spike and
poverty hovering close to 40 percent. The country is grappling with $44.5
billion International Monetary Fund’s (IMF’s) debt.
The question
that raises here whether Argentina would embrace membership of BRICS under
these circumstances?
The alliance
represents the two major adversaries of United States, China and Russia along
other members Brazil, India, and South Africa.
Background of the Crisis:
Argentina is
facing worst economic crisis from the depression 1998 to 2002. It was reported
that when unemployment reached 20 percent and while more than half of the
population remained below the poverty line.
President Alberto
Fernandez of the Everyone’s Front (centre-left Frente De Todos) coalition has announced that he is not going to seek a second term.
Last year in
the month of June, Fernandez requested full membership of BRICS in its video
conference with representatives and the heads of the states.
Brazilian
President Luiz Inacio Lula de Silva, in its recent address, pledged from Brazilian
people to help them remove the knife of IMF from Argentina’s neck.
Whether
Argentina that is a South American nation will join the BRICS remained an open
question form a time ago. There is no guarantee that membership will be
fruitful. However, it seems that Argentina will possibly all the help it can
get from BRICS.
According to Vicky
Morillo, who serves as the director of the Institute of Latin American Studies
at Columbia University in New York said that “When you are in opposition,
you are free to say whatever you want”.
But if either
coalition wins, the next government will have to pay more attention towards Brazil
and China.
Emerging BRICS:
According to an
analysis, BRICS is an acronym used to describe some of the largest markets in the
world.
It represents
more than 40 percent of the world’s population. It was conceived as a counterweight
to G-7 that have long dominated Global Economy and its financial intuitions.
The bloc established
in New Development Bank (NDB) during its sixth annual summit in Brazil, Fortaleza
in 2014.
Although, NDB has
only $12 billion that it can distribute to member counties.
But BRICS
countries have combinedly trillion of Dollars in reserves with a lot liquidity available
to help Argentina refinance its debts.
Why there is a need to get BRICS Membership:
Argentina has
pursued a closer relationship with BRICS. The country has taken loans from IMF
multiple times. In 2018, the IMF provided a record $57 Billion to the right
wing administration of the then President Mauricio Marci.
But rather than
building infrastructure, that money was used to finance capital flight, a violation
of the IMF’s by laws.
There are several reasons:
- The economy of the country is stalled.
- Inflation soared to more than 50 percent in 2019.
- Alberto Fernandez cancelled last tranche of the loan.
- His administration failed to staunch the bleeding.
- The Covid Pandemic
- The costly war in Ukraine
- Historic Drought
All of these factors enabled the country to take the BRICS as a greater option for its salvation
from IMF and Debt.
How BRICS can Help?
BRICS has the
capacity to redefine Argentina’s relationship with debt. The Julio Gambina, an
economist and professor at National University Rosairo in Argentina has said.
“If Argentina were to gain
entrance to BRICS only to drop out because an entering government has a
different political orientation, that would be very costly,” Tokatlian told
Al Jazeera
“At the same time, the
BRICS countries want to be certain that new entrants to the bloc will remain.
So they’re making their own strategic calculations.”
(Courtesy: Al-Jazeera)
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