Argentina's future membership in the BRICS bloc has been scrapped by President-elect Javier Milei's team, as confirmed by Foreign Minister-designate Diana Mondino.
"We will not join the BRICS," Mondino wrote on social media platform X, formerly known as Twitter, on Thursday.
Last month, Argentina elected right-wing libertarian Milei as their new president with a decisive 55.65 percent vote. Milei, known for his controversial statements, now faces the immense task of steering Argentina's economy away from the precipice of triple-digit inflation, recession and deep-seated poverty.
Milei's move to halt the country's entry into BRICS annulled Alberto Fernández's departing administration's years of efforts to secure Argentina's full membership into the bloc.
In August, Argentina was invited to become a full member of BRICS, along with five other countries, which would come into effect on January 1, 2024. At the time, President Fernández was enthusiastic that the invitation could help the country reach new markets.
This shift marks a significant change in Argentina's foreign policy under Milei's leadership, which is poised for a drastic swing to the right, prioritizing economic interests over aligning with leftist governments.
Moreover, Milei has criticized China multiple times in the past and even talked about plans to break diplomatic relations with the country. In an interview with former Fox News host Tucker Carlson, he said he refused to work with "any communist" and preferred to work with the U.S.
He also voiced disapproval of Brazilian President Luiz Inácio Lula da Silva's leftist government.
No ingresaremos a los BRICS.
— Diana Mondino (@DianaMondino) November 30, 2023
‘Multilateralism,’ not alignment with ‘one group’
Mondino asserted that the upcoming administration was not "pulling back" from plans to join BRICS because Argentina had never formally accepted the invitation. She made these remarks during a brief interaction with the press shortly before participating in the 29th Industrial Conference of the Argentine Industrial Union (UIA).
"It's an open invitation, and as far as I know, Argentina has not accepted yet," she said at the time.
Mondino had previously said "there was no relative advantage in joining BRICS" and signaled that the president-elect would "reconsider" the country's inclusion in the state group.
"The BRICS are still not a commercial bloc; for now, it is more akin to a political alignment, and in Argentina, we hope to achieve multilateralism, and not align ourselves with one group of countries or another," Mondino said.
Historically, Argentina has been neutral in global conflicts, granting it increased commercial flexibility and prospects. Conversely, the departing government displayed a strong inclination towards strengthening connections with China and Russia, which is why Mondino believes joining BRICS is unnecessary, especially as Argentina already maintains diplomatic and trade ties with the majority of BRICS nations.
During the UIA conference at the Buenos Aires Convention Center, Mondino emphasized economic pragmatism. Echoing Milei's vision, she advocated for unilateral trade opening through tax simplification and reduced government spending. This marks a shift away from BRICS and towards a more open economy.
Possible plans for dollarization
Aside from rejecting BRICS' invitation, Milei has plans to replace Argentina's peso with the U.S. dollar, or dollarization. This drastic measure aims to address the country's crippling inflation, currently at 140 percent.
However, Milei is already backtracking on some of his most radical campaign promises after his victory. He has replaced key advisors with a more moderate team and is sending conciliatory messages to China and other nations. According to the Atlantic Council, this suggests his pledged dollarization of Argentina's economy is increasingly unlikely to be conducted soon.
His conciliatory approach has reportedly calmed investors, as he acknowledged the limited realistic options available. With depleted reserves, closed markets and a derailed IMF program, Argentina decided to keep China as a crucial trade partner and potential financial backer.
In this situation, dollarizing Argentina could trigger a severe depression, pushing more people into unemployment and poverty. The country lacks sufficient dollars to replace its currency at the current rate, which will lead to a major peso devaluation. Despite the risks, Milei still sees dollarization as a long-term possibility.