Argentina’s Economic Turmoil’s and IMF

Jul 31, 2023

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Buenos Aires, Argentina – The picturesque streets of Argentina are currently marred by a storm of economic instability, as the nation faces an chronic crisis characterized by soaring inflation, price hikes, interest rate fluctuations, currency devaluation, and an unsettling law and order situation marked by incidents of looting and social unrest. At the heart of this turmoil lies a contentious relationship with the International Monetary Fund (IMF), raising questions about the role of harsh IMF policies in exacerbating the nation’s economic woes.

Inflation and Price Hikes

Argentina’s economy, once a beacon of promise in South America, has been grappling with relentless inflation that has eroded the purchasing power of its citizens. Recent reports from the Argentine Central Bank indicate an annual inflation rate of over 50%, a staggering figure that has led to significant price hikes in essential goods and services. But some experts believe the actual inflation may have touched three figures (Above 100 %). The price of basic necessities such as food, fuel, and medicines has surged, pushing many vulnerable populations to the brink of survival.

Interest Rates and Economic Stability

The nation’s interest rates have been oscillating amid efforts to curb inflation and stabilize the currency. The Argentine Central Bank has undertaken measures to control the monetary situation, but these moves have led to fluctuations in interest rates. The Bank is stuck with INF conditions and cannot make policies in the national interest. These uncertain interest rate movements have not only impacted borrowing costs for businesses but have also discouraged investment, hindering economic growth prospects.

Law and Order Situation: Looting and Unrest

A distressing undercurrent of civil unrest has emerged in tandem with the economic crisis. Incidents of looting and protests have escalated, further straining the nation’s social fabric. Supermarkets and stores have been targeted by looters in search of essential supplies, painting a grim picture of desperation among the populace. Law enforcement agencies are working diligently to restore order, but the underlying economic distress continues to fan the flames of unrest.

The IMF Connection

Argentina’s history with the IMF is not new, and the current crisis raises questions about the impact of IMF policies on the nation’s economic trajectory. Over the past few decades, Argentina has entered into several agreements with the IMF, seeking financial aid to alleviate economic woes and stabilize its currency. However, the harsh conditions attached to these loans, often requiring austerity measures and structural reforms, have been sources of contention.

IMF Policies and National Economy

Critics argue that the stringent conditions imposed by the IMF in exchange for financial assistance have exacerbated the economic challenges faced by Argentina. A notable example is the 2001 financial crisis, where the IMF-supported policies were met with massive protests and political upheaval. These conditions are believed to have contributed to deepening economic woes rather than providing a sustainable solution.

A Complex Scenario

While the IMF’s policies have been a contentious point, it is important to recognize that Argentina’s economic challenges are multifaceted. A history of political instability, mismanagement of resources, and external shocks have also played a role in the nation’s current predicament. Experts emphasize the need for a balanced approach that addresses both the structural issues within Argentina’s economy and the role of international institutions.

Looking Forward

As Argentina navigates these turbulent waters, it is crucial for policymakers, international institutions, and citizens to work collaboratively towards sustainable solutions. A thorough review of economic policies, tailored to Argentina’s unique circumstances, is necessary. The nation’s rich potential and resilient spirit are assets that can be harnessed to steer the economy towards recovery and growth.

Argentina’s current economic crisis is a complex confluence of internal and external factors. The IMF’s role in this crisis remains a subject of debate, as the nation grapples with inflation, price hikes, interest rate fluctuations, and social unrest. Finding a way forward requires a comprehensive approach that acknowledges the intricate interplay of economic, political, and social dynamics, steering the nation towards a brighter future.

Lessons to be learned

Argentina is in IMF programs for several decades and could not revive it economy. The current disastrous situation is alarming not only for Argentina m but, also many other nation under IMF programs. Egypt and Pakistan are also typical examples of IMF regime. Till date, both have not made any breakthrough in their national economy and are facing heavy external debt as well as currency devaluation, inflation and interest rates. Although the law and order situation in both countries is still under control, but, is it we are following Argentina’s foot print? What will be future of these and other nations which are under strict IMF control? It is a time, where everyone need to think wisely and smartly. Should IMF require reforms, as, the current practices of IMF are proved counterproductive. Think twice!

BRICS: The United Populace of the World

Prof. Engr. Zamir Ahmed Awan, Sinologist (ex-Diplomat), Non-Resident Fellow of CCG (Center for China and Globalization), National University of Sciences and Technology (NUST), Islamabad, Pakistan.

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BRICS: The United Populace of the World

Artificial Intelligence and the new world order: Economy and peace (III)

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How soon will BRICS plus be identified as the united populace of the world? Some 250 years ago, it was the United States of America; later, there were the Commonwealth nations, the European Union, The ASEAN, the African Union, and more. Soon, it may become a humongous global trade group, the largest free zone, with streamlined efficiency on trade, training, and transfer of local currencies.

Finally, a new economic thinking on the national mobilization of entrepreneurialism, uplifting the women, youth, and their 50% high potential SMEs on digital platforms to quadruple exportability, something eventually called The United Populace of the World. Will this be the new The Voice of Humankind, heard carefully, as this is the exact chord where so many other international groups and global institutions have already failed big time?

Those already stopped reading the newspapers for slow-cooked and warmly-baked news, but those who gazed at a wall-size atlas over time now fully understand how the real world is spinning and how the media is counter-spinning. No secrets, just a lack of critical thinking. Agenda centricity is a highly intricate game of destructive power. It created splintered groups with hate of choice openly labeled and used counter-centrifugal forces to create micro frictions across the global populace. The social media that provides us some light to go out in the darkness now offers multiple options on why to stab and poke people freely along the way. Despite full awareness of the spawn of during the last decade, this techno-socio-germination in the hands of so-called human-made AI is now global chaos, like a devilish agenda glowing in the dark and searching for national exorcism.

The most colorful, dramatic landscape one can ever see: Like three-dimensional graphics, today, we see the divides between superpower and micro-power nations, population-rich and knowledge-rich nations. With the global availability of digitized data optimization, we see smart leadership-building governments and sleepy administrations destroying their citizenry. We see advancing nations and standing still nations. Some are forward-marching nations, and some are only backward-marching nations. We see the future of the countries and the pasts of the nations. It is the most colorful, dramatic landscape one can ever see.

This is where almost all big lessons of history are exposed when the truth rearranges the hidden facts between the national borderline lines and topographical characterizations. With patience and deep study, mysteries are uncovered, while technology strips naked and allows new wisdom to enter. This is all necessary, primarily highlighting global affairs and often the source of original problems strangling our current era in unnecessary conflicts. Shut-outs on dialogues and tongues swallowed in negotiations are the disastrous models. Humankind has a collaborative mind; splintered groups have a ‘seek and destroy’ mind. With no institution left to create a dialogue fit for humanity, only splintered factions mainly fight their losing agendas and create global chaos at center stage.

Today’s challenges demand special skills to decipher the speed of global age competitiveness, like how fast are ‘population-rich-nations overtaking the knowledge-rich-nations’? Understanding BRICS requires understanding the games of the population-rich nations’ economics and the ‘national mobilization of entrepreneurialism,’ which created a vast ocean of SMEs and opened global export markets. With 500 million new entrepreneurs in China and India alone and a billion SMEs in Asia, such numbers can suck the oxygen out of the sleepy Western economies in one afternoon. Study more on Google.

BRICS will enjoy entrepreneurial thinking, where global diversity provides impressive opportunities, tolerance brings growth and stability, and multilateralism adds warmth and wisdom.

The Warning: Across the free economies of the world, in the political rotundas, suddenly, there is no Elephant in the room; in reality, what is left is just the vacuum, 100 times the size of a jumbo elephant, the absence of ideas, and the lack of solutions. There is nothing to debate when the compass is missing, so rudderless leadership is confused, the directionless country adrift, and the citizenry herded on the purposeless journey. The new global challenge is not new funding but rather new mindsets.

The big answers to big questions: The hidden reward is a change in new economic thinking. Economic development without entrepreneurialism is economic destruction. There is no political power without economic power. There is no economic power without entrepreneurial power. There is no entrepreneurial power unless the mindset hypothesis is balanced. The mindset hypothesis creates a balance between the job seeker and job creator mindsets.

BRICS plus Nations: If new member nations pursuing economic powers and creating grassroots prosperity are the qualifiers, what are the essential checklists? How to face any standstill economic landscape in any region in any country, and how to create a vortex of entrepreneurialism filled with SME dynamics and bring centrality to productivity, performance, and profitability. What current expertise, entrepreneurial experiences, and articulation levels are already available to expand the required messages deployed and place local SMEs on mobilization? Finally, what national leadership level is necessary to make such ideas meaningful?

Expothon narrative: Expothon has been sharing pertinent information with some 2000 senior officials at the Cabinet level in around 100 countries for the last 50 -100 weeks. Mastery of new entrepreneurial economic thinking is a new revolution in SME Mobilization. In the coming months, a global high-level, virtual event series will advance the agenda, debate, clarify and table turnkey mobilization options. Unique models of transforming expertise to the top layers of economic development teams on ‘national mobilization of entrepreneurialism’ and how to identify, categorize, and digitize 1,000 to 100,000 high-potential SMEs within a region or a nation to quadruple exportability is underway. Study more on Google.

Elections 2024 now demand highly articulated discussions from the podium, as winning and losing are determined by economic productivity, where the countries will be lined up in their respective queues. In the coming years, dozens of governments will disappear and be replaced by caretaking administrations, as economic failures will break the old structures. Is there a better way to find green, circular, and climate change economies? The future of BRICS appears to challenge the old system and seek a distinct rise in meritocracies to create grassroots prosperity, the common good and possibly selective socialism.

Nations, all around, must advance their prime skills in understanding the hidden power of national entrepreneurialism and SME powers to exportability and where national mobilization will help them save economies. The rest is easy.

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The global changes at the turn of the two millennia and the epidemic of the century are currently intertwined. The world economy is struggling to recover and is facing many complex challenges. Economic globalisation is facing headwinds. Where is the world heading? Will it be more open or more closed than now? Cooperation or confrontation?

This is the reason why it is necessary to continuously emphasise the need for building an open world economy. There must be no restraints or reversals of trend. We need to be on the right side of history, expanding relentlessly by fully opening up to every innovation we can control, such as, hopefully, Artificial Intelligence – inter alia – about which we will speak later in connection with a new economic world order. We need to build a community with a shared future for the whole of mankind. The planet is circumscribed: there are no more terrae nullius – in the broadest sense – to be conquered, or peoples “to be educated” through the bogus, mystifying and hypocritical “white man’s burden” or various divining “manifest destinies” to be imposed on others with smart bombs or humanitarian wars.

Building an open world economy is an inevitable choice in line with the historical trend of equal development, or rather with the elimination of colonial, neo-colonial and imperialist remnants. Equal economic globalisation is the only way for the development of human society. Economic globalisation is historically the objective prerequisite for the development of social productive forces, and the inevitable result of scientific and technological progress has given great momentum to world economic growth. It has favoured the flow of goods and capital, the progress of science and technology and civilisation: indeed, Artificial Intelligence, which until yesterday seemed like science fiction, with yesterday’s eye projected onto today may seem uchronia, but is objective reality.

Exchanges between peoples are in line with the common interests of all States. In today’s world, a new step of scientific and technological revolution, as well as industrial transformation, proves to be each time a profound development. The system of global governance is deeply changing and the international model is affected, thus speeding up the process.

The interests of all countries are interwoven and destiny is shared. Cooperation and mutually beneficial relations – in the case of bilateral relations – are becoming the general trend. Peace, development, cooperation and mutual gain would be the trend of the present times, even if not yet achieved due to the needs and demands of the international war industry (see the case of the Ukraine-Russia war).

After all, no one can cope with the various challenges facing mankind alone, and no country can turn geographically into an island closed in on itself, such as the United Kingdom which dominated the world in the 19th century, also thanks to its physical configuration, later followed by its former colony, namely the United States of America.

Openness brings progress and, conversely, isolation will inevitably leave those that supports it behind. If a country wants to develop and thrive, it must grasp, follow and adapt to the general trend of world development, otherwise it will inevitably be left behind by History. The desired project of a new world economic order firmly pursues a strategy for liberalising and facilitating trade and high-level investment policies, and promotes the creation of a pattern of contacts and relations linking land, sea, overseas, East and West, which are the fundamental promoters of a common global open-minded approach. They are the pivots of a stable source of strength and power for global economic growth, regulated by the jus gentium.

Building an open world economy is an unavoidable prerequisite to advance and adhere to the common values of all mankind. Countries have different histories, cultures, systems and levels of development, but the people of each State pursue the common values of peace, development, equity, justice, democracy and freedom for all mankind: gens una sumus. The common value of all mankind embodies consensus on the respect for the values of each different human civilisation. It represents mankind’s common quest for a better future and is also an important symbol of human progress.

The fact of building an open world economy, of fostering economic globalisation in a more open, inclusive, balanced and win-win way for everybody, of pursuing cooperation instead of war and/or political confrontation, of embracing openness instead of narrow-mindedness, of pursuing mutual benefit and avoid a zero-sum game means to consciously promote adherence to the common feelings and sentiments of all mankind.

Practice has shown that the peaceful development of the world is inseparable from mutual openness and tolerance. Any unilateralism and extreme self-interest are totally unworkable. Engaging in “inner circles” must also be fully rejected. The same holds true for triggering confrontation along outdated ideological policy lines, which in the past meant oppressing the weak so that the winner could take it all. The particularism of self-styled economic-political and ideologically imposing elites is an increasingly narrow blind alley. Believing to be the repository of truth and wanting to impose one’s own model on States, countries and nations, as well as peoples, is a moral and above all a factual crime.

Only with a highly responsible attitude towards the future and the destiny of mankind can we promote the construction of an open world economy, and practise global governance with broad consultation as a joint contribution to shared benefits. Support exchanges and mutual learning between different sources of knowledge is the right way for the world to grow wider. This means being on the right side of History and continuing to promote the construction of new economic and political world orders.

Mankind is currently emerging from a particular historical period. The Covid-19 epidemic has fully affected the planet and we have sustained global changes not seen for more than a century, as a reminder of the Spanish flu pandemic. The global industrial and supply chains have been affected. There have often been cases of unilateralism, protectionism and interstate bullying, i.e. risks and uncertainties in the international community. The world, however, has not returned to a state of total mutual closure and separation. Open cooperation is still maintaining itself as a historical trend and the possibilities of common benefits for all are still what people, namely citizens, want and desire.

Based on these principles, not only will individual people gain momentum for development in the future, but the world will benefit even more. To this end, on the one hand, it is crucial to establish an overarching vision, and to firmly pursue a mutually beneficial strategy of openness for all. This means going global with a proactive attitude, and insisting on the implementation of broader cooperation between States, so that a wider scope and deeper awareness of openness to the outside world can be reached. Only by taking action in this world will we be able to achieve a higher level of participation.

The system of an open economy will step up the construction of a new development model with the domestic cycle as the main structure and national and international cycles promoting each other, so as to create new advantages in international economic cooperation and free competition.

On the other hand, we need to promote the construction of a new type of international relations, to adhere to the correct concept of justice and interests in international trade, and to oppose all forms of protectionism, hegemonism and Cold War mentality. Not only does this encourage countries to make full use of their comparative advantages and jointly optimise the allocation of global economic resources, but it also fosters the construction of a global value chain for shared benefits that can promote a global market for the benefit of all parties. This means creating a free multilateral and non-discriminatory trading system for the benefit of global economic stability, post-Covid recovery and sustainable development. (3. end)

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In global geopolitics, military strength and capabilities or economic viability and prospects of a nation, such data from a data analysis understanding are vital to understand and measure its national power and strength. Over the years, many nations have come together to achieve their shared objective and interests and have expanded their grouping despite such groups are vital or no longer needed today. NATO fits such a description; in the paper, the analysis will be done on BRICS becoming an alternative to G7 as the bloc has started to undermine G7’s reach, power and influence in the global geopolitics.

On June 16, 2009, BRIC (Brazil, Russia, India and China) was formed, and the addition of South Africa in 2011 established BRICS, a bloc of emerging economies that are working to instate their world economic and trade systems. As data concerning the economy and military’s strength have a multi-frontal aspect, it remains relevant in geopolitics to understand a country or bloc like BRICS’ reach and influence. In 2023, BRICS contribution to global GDP (31.5%) has surpassed G7 contribution (30.7%) and now nearly accounts for 1/3 of the world economic activity and has become a voice of the developing nations worldwide.

The 15th edition of the BRICS summit was held in Johannesburg, South Africa, between August 22 and 24 under the theme ‘BRICS and Africa: Partnership for mutually accelerated growth, sustainable development and inclusive multilateralism’. BRICS have aimed to reshape the political-economic landscape to benefit themselves and further shape the global political and economic order to suit their shared interests. The recent rise of BRICS and developments like the de-dollarisation, the drive to expand BRICS and China’s push to oust G7 and make BRICS a global leader has begun the G7 vs BRICS rivalry.

The significance of BRICS

The term BRICS was coined by Goldman Sachs Analyst Jim O’Neill, who argues in coming times, G7 members should consider adding BRIC members as their contribution to the global GDP will only increase. At the time of such a statement, BRIC’s contribution to the global GDP at the end of 2000 was 23.3% and today has surpassed the G7 contribution to global GDP and become significant and a strategic competitor and rival to G7. The 2023 BRICS summit has become the biggest summit in its history as the bloc invited 69 state heads, highlighting its rise and showcasing its growing value worldwide and global acceptance.

The BRICS mechanism and structure works to promote peace, security, development and cooperation to establish a fair and equitable world and became a prospect and, to an extent, an alternative to other countries to join the group. With group accounts for 41% of the globe’s population, 30% of the land area, 31.5% of global GDP and 16% of international trade, BRICS, today, no longer be ignored by other countries. Promoting cooperation, economic growth and development and enriching people-to-people contact are BRICS’s three pillars. Since 2009, the bloc has worked and established more than 30 cooperation among themselves and like-minded countries. With BRICS combined worth equal to the US economy, the bloc has become a voice for the global south (developing nations) and is pushing to reshape the global order and reform institutions like the UN, WHO, WTO and IMF. Further, despite the ongoing border dispute between India and China, cooperation between both nations in the BRICS forum has remained, and the Beijing Declaration 2022 showcases the bloc’s intent to address the conflict and ensure global peace and stability.

BRICS vs G7: China’s push to make BRICS alternative to G7

In recent years, China’s geopolitical initiatives and measures aren’t only to carve out a space for itself and counter the US-led order worldwide. Strategic moves like the Belt Road Initiative, Shanghai Cooperation Organisation (SCO), Global Development Initiative (GDI) and Global Civilisational Initiative (GCI) and their global acceptance have given ample scope to China to go past the US in coming times. In such circumstances, the growing significance of BRICS and becoming a strategic rival to G7 has become the focus for other developing nations to align with the group to secure their interest.

The transformation of BRICS from a non-aligned bloc for the economic interest of developing countries into a political force to openly challenge the West has yet to become a reality. The expansion of BRICS and the inclusion of six countries will change the direction of the bloc and its approach towards global geopolitics. South Africa President Cyril Ramaphosa argues that the expansion of BRICS will represent a diverse group of nations sharing a common desire, and India, Russia, China and Brazil support such an approach. Brazil’s invitation to Iran, Egypt, Saudi Arabia, the United Arab Emirates, Ethiopia and Argentina to join BRICS in January 2024 will diversify the group’s power, hold and relevance in the global geopolitics. The inclusion of such nations enhances the scope of the BRICS, as the presence of large oil reserves in Saudi Arabia, Iran, the UAE and Russia, which holds 43% of world reserves and share of new members in the global GDP, will increase BRICS bargaining power in global power politics in coming years.

To understand such joining, the inclusion of Saudi Arabia and the United Arab Emirates will amplify BRICS dominance in the Middle East region’s geopolitics, which will undermine US-led order in the region. Recently, China’s move to broker a peace deal between Saudi Arabia and Iran has alarmed the West of China’s intent to counter the West as it began to flex its muscles. The BRICS provides China with an opportunity to expand its reach, and its existing ties with BRICS new members need to be carefully considered as it could impact the working and functioning of the bloc in the coming years.

Chinese President Xi Jinping, in his speech during the summit, argues as China looks for expansion of BRICS, emphasises China’s aversion to hegemonism and bloc confrontation and wishes for a more equitable international order. However, China and Russia look at the BRICS as a counter to Western dominance and oust G7 as a global leader in the coming years. Thus, the use of local currency for trade by BRICS members and the push to de-dollarise the global economy is being done with such intentions. A global de-dollarisation is still a distant dream; Chinese-led institutions and growing China’s hold in other blocs like SCO will give impetus to such a drive, and thus, the role of G7 to counter it has become pivotal.

On the issue of BRICS becoming an alternative and strategic rival to G7, a shift has been witnessed in the global geopolitics post-Russian invasion of Ukraine in February 2022. The anti-west narrative and its acceptance have gained momentum to move away from the US-led order viewed in the push for local currency for trade to de-dollarise the global economy. As the invasion united the West against Russia but distanced them from the rest as consolidation of the West is taking in the backdrop of a divided Cold War order, and emerging powers like China and India and blocs like BRICS have taken centre stage in global geopolitics. The push to formulate a BRICS currency has gained momentum, which will impact G7 and the US hold in the global economy.

As the rise of BRICS in the last two decades is impressive and unquestionable, the bloc members continue to trade more with G7 members than within the bloc. China being the lead economy of the bloc, its trade with the G7 (27%) shadowed trade with BRICS (7%), and such aspects were also reflected in the case of India, South Africa and Russia, excluding Brazil. In the current context, BRICS cannot offer the financial and economic incentives that the G7 has at its disposal as global acceptance of dollar provides G7 better scope to compete with BRICS. The inclusion of new members and the launch of BRICS currency in the coming years will empower BRICS. Being politically appealing to many countries, in the coming times, with new members, BRICS will become strategically vital and an alternative to G7 to nations willing to bandwagon with the rise of the global south and BRICS.

Conclusion

This raises a valid point, if BRICS has to remain relevant in global geopolitics in the coming decades, the members (existing and new) must come together and formulate a clear vision to secure their core principles and pillars. The expansion of BRICS is a good prospect as it will strengthen its voice, allowing it to venture into a new domain like the outer space, artificial intelligence etc. However, BRICS members should strengthen trade with each other, strengthen their internal economy and National Development Bank (NDB) and set up a meditation process that will project BRICS as a serious player intent to address global issues and threats. Further, BRICS should set up a new institution – transforming ideas into a reality – like the BRICS Credit Rating Agency proposed by India, benefiting others by providing an alternative to the Standard & Poor and Moody. Such developments will strengthen BRICS and supersede the G7 as a vital player and mediator in global geopolitics. It will empower China to push its agenda and idea of a new global order, and the Chinese-led initiatives like the GDI and Global Security Initiative coupled with the summit highlight BRICS is moving in this direction. However, other BRICS members must address such a scenario and ensure that the existing global order and BRICS don’t become another SCO that acts as a vehicle for China to challenge the existing global norms.

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