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The West is using financial instruments to dissuade Argentina from joining BRICS, which is scheduled for January 1, 2024. A New York court has presented the government of Buenos Aires a “hefty” bill for $16 billion. According to the OSCE, Argentina's GDP risks falling by 2% in 2023 and by a further 1.2% in 2024.

Theoretically, on January 1, 2024, Argentina, along with five other countries – Saudi Arabia, Egypt, Iran, the UAE, and Ethiopia – should join the BRICS group. This international organization already includes Brazil, Russia, India, China, and South Africa, which want the world to move to a new multipolar system. Argentina has applied to join BRICS in September 2022. After this step, the country came under pressure from the USA and the European Union, which very persistently “advised” President Alberto Fernandez to reconsider his own decision.
At the annual meeting of the European Union and the Community of Latin American and Caribbean Countries (CELAC) in Brussels on July 18, Argentina announced it would “indefinitely defer its BRICS membership.” However, a month later, at the BRICS summit in Johannesburg (South Africa), Fernandez changed his mind again. “Becoming an integral part of BRICS is a great opportunity to strengthen our country,” the President of the Argentine Republic wrote on August 24 on his official page on the X social network (formerly Twitter).
Argentina is the weakest link in the entire group of six newcomers. It was obvious that in the remaining four months between the BRICS summit and January 1, 2024, the West would increase pressure to exclude Buenos Aires from this association.
First, the West offered a “carrot”: The International Monetary Fund has approved the allocation of a new loan tranche to Argentina in the amount of $7.5 billion.
When it became clear that the “carrot” did not work, the financial “stick” was immediately used. It seems that in order to dissuade other potential candidate countries from joining BRICS – we are talking about 40 interested states – a demonstration process was organized, a kind of “public flogging” of Argentina.
It seems that Argentina is being inexorably squeezed “in a financial vice.” The West has long learned to drive developing countries into debt, forcing them to take loans from credit institutions they control. Once a country that has “lost its balance” takes the hook of “financial assistance, it then gets bound by ever new obligations,” Russian Ambassador to Argentina Dmitry Feoktistov commented on the situation.
Argentina may now have to pay $16 billion to nationalize oil and gas company YPF Argentina SA due to a verdict handed down on September 8 by the Southern District Court in Manhattan, New York. The verdict of American Judge Loretta A. Preska did not indicate the exact amount of damages to Burford Capital and Eton Park. Experts estimate that the payout could reach $16 billion.
The decision to nationalize YPF Argentina SA was made in 2012 by the then government of President Cristina Fernandez de Kirchner and, under the pretext of “insufficient investment,” returned to the state 51% of YPF, which at that time belonged to the Spanish Repsol. In 2014, Argentina and Repsol reached a compromise that awarded the Spanish group $5 billion in compensation.
Separate from the agreement between Argentina and Repsol, Burford Capital, an international law firm headquartered in London, acquired the rights to 25% of YPF from Petersen Energía and filed a claim against Argentina, seeking restitution. The same was done by Eton Park, which entered into YPF capital two years before nationalization and controlled 1.63% of the capital, valued $250 million.
The US court’s decision has put Argentina in a difficult position. Presidential Administration spokeswoman Gabriela Cerruti confirmed that “Buenos Aires will continue to fight to protect our energy sovereignty and our state company YPF from all vulture funds.” It was announced that Buenos Aires would appeal, opening a negotiation phase to try to reduce any possible impact of the ruling on the country’s finances.
Argentine political scientist and economist Matias Cacciabue expressed hope that BRICS will help Argentina “solve its economic and financial problems.”
According to the latest estimates from the Paris-based OECD (Organization for Economic Co-operation and Development), Argentina is the bottom country in the G20. In September, OSCE analysts revised downward their assessments of this South American country’s economy and warned that Argentina risks falling into recession next year. In 2023, Argentina’s GDP is expected to decline by 2% compared to 2022 and by another 1.2% in 2024. Argentina’s credit rating has been downgraded five times, from B2 in 2001 to its current level of Ca.
Argentina entered next month’s presidential elections with an annualized inflation rate of 113%. As local media reported, all three of outgoing President Alberto Fernandez’s rivals, from Patricia Bullrich of the Cambiemos party to libertarian Javier Milei and Peronist Sergio Massa, “acknowledged the central role of economic issues in Argentina’s future,” promising their voters “bold intervention,” including financial issues.
“However, the country’s history shows that potential risks associated with governance and social unrest often stall political action,” writes political scientist Riccardo Cantadori. Many people, not only in Argentina, but also outside, are now very closely watching how BRICS will behave in this very delicate situation.

Giornalisti e Redattori di Pluralia

Editorial board