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Buenos Aires seeks protection and new economic and geopolitical perspectives in the group of five.
In early 2023, 13 countries submitted formal requests, and six more submitted informal ones, to join the BRICS group (Brazil, Russia, India, China and South Africa). "We receive requests to join every day," South Africa's ambassador to the BRICS, Anil Suklal, said.
Nothing surprising. Today, the BRICS, which has a population of 3.2 billion out of the "planetary" 7.8 billion, accounts for 31.5% of world GDP, while the G7 accounts for 30.7%.
The issue of bloc expansion will first be discussed by BRICS foreign ministers in Cape Town on June 1, and then a final decision is expected at the annual summit in the South African province of Gauteng on August 23-24.
There are three options: mega-expansion, when the number of members would increase from five to 21 at once and eclipse the G20; limited admission of 10 new members, with each of the five current members sponsoring two new candidates; and, finally, admission of only five new members, one for each of the current members, with no veto power.
The most likely new members will be Argentina and Iran. "Both Argentina and Iran are worthy and respected candidates, as well as a number of other countries," Russian Foreign Minister Sergey Lavrov stressed that the decision to join one or another country in the association will be determined by consensus.
Argentina can be considered as a platform for economic cooperation, the demilitarization of the South Atlantic, space cooperation and the preservation of the region's nuclear-free status. In addition, Argentina is currently serving as a regional leader through its presidency (2022-2024) of the Community of Latin American and Caribbean States (CELAC).
Argentina is most lobbied by the president of neighboring Brazil, Luiz Lula da Silva.
To understand why Argentina seeks closer relations with the BRICS, one need only look at its latest loan from the IMF. In 2018, the fund gave a record $57 billion to the right-wing administration of then-President Mauricio Macri.
But instead of rebuilding Argentina's crumbling infrastructure, this money was mostly used to finance capital outflows. The economy stagnated, inflation jumped to more than 50% in 2019, and voters abandoned the center-right in favor of the center-left as a result. The new president, Alberto Fernandez, canceled the last tranche of credit, but his administration failed to stop unstable times.
Economic experts expect inflation to be at least 130% for the year in the coming months, and poverty could rise to 45 – 50%. According to the state statistical agency INDEC, consumer prices rose by 8.4% in April compared with the previous month.
Recently Argentina put into circulation a new 2,000 peso bill. At the official exchange rate this bill costs only $8.21, but at the black market rate it is half that – $4.08. Naturally, the new banknote arouses neither curiosity nor enthusiasm among the population.
The situation is aggravated by the worst drought in 100 years. According to official forecasts, the yield of the main export crops – soybeans and wheat – will be halved this year and corn by more than a third. Rosario National University economist Tomás Rodríguez Surro estimates the total damage to Argentina's economy from the disaster at $20 billion, nearly three percent of GDP and nearly half the IMF's debt alone.
On top of everything else, and maybe most importantly, no one has cancelled the $44.5 billion in IMF debt payments. Where to find it? How to get rid of the noose?
"BRICS has the potential to help rethink Argentina's attitude toward debt," economist and professor at Rosario National University in Argentina, Julio Gambina, suggested. – "Its investment could allow the country to build a social economy that prioritizes the needs of the family and the individual over those of multinational companies." Whether this is true, time will tell.
Many believe that the growing influence of the BRICS will also help Argentina get rid of the notorious hegemony of the dollar: its total foreign exchange debt exceeded $276.7 billion in the first quarter of 2023, according to the CEIC Data economic statistics database.
By the way, the presidents of Brazil and Argentina, Lula da Silva and Alberto Fernandez, announced the decision "to activate the creation of a single South American currency within the common market of South America, MERCOSUR (the proposed name of the monetary unit – "sur", Spanish "south" – Auth.), which can be used to serve both financial and trade flows to reduce transaction costs."
The BRICS countries are also working on creating a new international reserve currency that would replace the U.S. dollar and the European euro and would be based on a basket of currencies of the group member countries, Russian President Vladimir Putin said at the BRICS business forum last June. That is, the Brazilian real, the Russian ruble, the Indian rupee, the Chinese yuan and the South African rand.
This difficult task is likely to fall on the shoulders of the New Development Bank (NDB) of BRICS and will require a lot of time, human and financial resources, but in the future will be able to fully protect the BRICS countries from the risks associated with settlements in currencies such as the dollar and euro, according to Russian experts. For her part, NDB BRICS President Dilma Rousseff noted that "the use of the dollar is becoming undesirable due to Western sanctions pressure on third countries."
The possibility of joining the NDB BRICS "is beneficial for Argentina in its current position and, incidentally, it does not require prior membership in the bloc," according to the authors of the report "BRICS and Argentina: A Key Geopolitical Opportunity" from the Argentine analytical center Observatorio de Coyuntura Internacional y Política Exterior (OCIPEx).
"From the NDB, we could get funding and technical assistance for key infrastructure projects that drive national productive development," the report notes.
One of the main incentives for Argentina to join the BRICS was the support of most (four out of five) members of the bloc for Argentina's sovereignty claims to the Malvinas (Falkland Islands). "This is a key geopolitical fact that we must take into account in the face of the militarization carried out by the highly aggressive Anglo-Saxon axis in various parts of the globe, including the Malvinas Islands, where the largest NATO military base in our region operates," the authors of the OCIPEx report state.
BRICS offers an alternative to the financial, economic and commercial architecture developed by the United States and its allies after World War II.
Russian President Vladimir Putin believes that the leadership of the BRICS is necessary for the world to form a truly multipolar interstate system based on universal norms of international law and the principles of the UN Charter.
BRICS economists argue that the Big Five, in its current composition, will be able to catch up and overtake the Big Seven at a successful pace of development by the middle of this century. However, the BRICS is not designed to compete, but to survive in the new conditions of global development.
In 2022, during his visit to Moscow, President Alberto Fernandez rashly told Vladimir Putin that Argentina could become a "Russian gateway to Latin America," wishful thinking. Whether this is realistic will be shown by the upcoming general elections on October 22, 2023, unless, of course, Argentina is led astray.