Javier Milei’s Presidential Win Means Argentina Probably Won’t Join BRICS
New elected President wants to dump Brazil and China as trade partners and replace the Peso with the US dollar among other radical reforms.
With the Far Right candidate Javier Milei winning the Argentinian Presidential elections over the past weekend, Argentina’s invitation to join the BRICS grouping, given just three months ago, is now unlikely to be accepted.
During his campaign, Milei – who will take office on December 10 – vowed to abolish the Central bank, dump the Argentinian Peso as a currency and replace it with US dollars in order to overcome a financial crisis that has left 40% of Argentina’s 45 million citizens in poverty and pushed inflation to more than 140%. “I know how to exterminate the cancer of inflation” he has stated.
Milei’s radical ideas have also included cutting ties with Argentina’s two biggest trade partners, Brazil, and China. Milei has said he will not maintain political ties with China or any “communist” country, limiting relations to the private sector. He has labelled the country an “assassin” and claiming that its citizens are not “free”. He has also promised to pull Argentina out of Mercosur, the South American trading bloc, and has described Brazil’s President Luiz Inácio Lula da Silva as a “socialist with a totalitarian vocation”.
When it comes to economic reality it is uncertain if he will be able to follow through on these statements. Sabino Vaca Narvaja, Argentina’s ambassador to China, said breaking ties with China would lead to the loss of “millions of jobs” and a “triple productive, social and financial implosion”. He highlighted the many infrastructure projects funded by Chinese banks in Argentina, such as two hydropower dams in Patagonia, and said these initiatives could be suspended any break in the countries’ ties. Argentina also has a US$18 billion currency swap line with China, which it has tapped to support the Argentinian Peso.
In August, Argentina was invited to join Brazil, Russia, India, China and South Africa as a full member of the BRICS group of emerging economies, partly thanks to the support from China.
Milei’s opponent in the elections, Sergio Massa, highlighted in debates the importance of China for the national economy, as it accounts for a large share of many Argentine provinces’ exports. Milei replied by claiming Argentina could simply find other trade partners, and dismissed Massa’s statements that jobs would be affected by changes in the relationship with China.
However, China is also now Argentina’s second-largest trade partner. Its agribusiness sector plays a leading role in this relationship, with 92% of the country’s exports of soybeans and 57% of its meat shipments sent to China in 2022. China has also made notable investments in the country’s energy sector and its growing lithium industry.
As ever, the response from Beijing has been pragmatic: China congratulated Javier Milei for winning the presidential election in Argentina, even after he questioned the need to trade with the Asian nation. “We congratulate Argentina on its presidential election and congratulate Mr. Milei on his election,” Chinese Foreign Ministry spokeswoman Mao Ning said at a regular press briefing yesterday (Monday November 20).
Back in August, when Milei’s China views first surfaced, Wang Wenbin, a spokesperson for China’s foreign ministry, responded to Milei’s statements by inviting him to visit China. “I believe that if Mr Milei can come to China and see the country for himself, he will find a totally different answer to the question of whether or not Chinese people are free and China is safe.”
What happens next is uncertain. Milei has some similarities with Ukrainian President Volodymyr Zelensky in that he is also not a career politician and has a background as a TV presenter. Donald Trump has hailed Milei’s triumph by saying “Great news! Melei will make Argentina great again”.
What is for certain is that Argentina’s membership of the Belt & Road Initiative and its pending membership of BRICS will be very much up in the air.