Milei Formally Withdraws Argentina From BRICS Entry

Argentine President Javier Milei, left (Senado de la Nación Argentina)

The Lede: On Friday, Argentina's newly inaugurated President Javier Milei sent letters to the leaders of the BRICS nations to formally withdraw his country from its planned entry into the organization as the populist leader shifts Buenos Aires away from Beijing toward Western countries despite China’s growing engagement in South America.

What We Know:

Milei told the leaders of the main BRICS nations that the moment was not ‘opportune’ for Argentina to join BRICS in a letter released on Friday dated December 22. However, he expressed that he was ready to hold meetings with each of the BRICS leaders to work toward intensifying bilateral ties and increasing trade and investment flows. Meanwhile, Saudi Arabia, Iran, the United Arab Emirates, Ethiopia, and Egypt joined the organization on January 1 as planned without Argentina.
This is a reversal from the path set forth by Milei's predecessor, the center-left president Alberto Fernandez, who had endorsed joining BRICS as an opportunity for Argentina.
On December 21, China suspended a $6.5 billion currency swap agreement with Argentina following Milei’s inauguration and the negative sentiment from the administration toward Beijing.

The Background: The BRICS organization consists of Brazil, Russia, India, China, and South Africa. The expanded group contains a combined population of about 3.5 billion, making up 45% of the world's population. The combined economy of the bloc is worth over $28.5 trillion, which represents about 28% of the global economy. Member countries will also be producing about 44% of the world's crude oil. Argentina is also ready to potentially abandon cooperation under China’s Belt and Road Initiative (BRI).

Likely Outcomes:

This reversal of Argentina’s path from economic and financial cooperation with China will likely sour bilateral ties and make trust-building between Beijing and Buenos Aires more difficult moving forward. The suspension of China’s currency swap agreement with Argentina could signal further turbulence. Beijing may also pursue some policies aimed at attracting good will with Argentina to try to restore some of the potential cooperation that has now been dashed by Milei’s stance.
On the other hand, the U.S. may see this as an opportunity to bring Argentina into its sphere of influence in the competition with China. Milei already met with national security advisor Jake Sullivan in late November. Washington may step into Beijing’s role to provide some currency liquidity as Argentina grapples with its tremendous inflation and debt issues. Along with Milei’s plan to dollarize the Argentinian economy, direct U.S. involvement in the country’s currency issues could mean heavy dependence on the side of Buenos Aires and leverage in favor of Washington.

Quotables:

“I will not push or promote relationships with dictatorships, communists, those who have no regard for peace or don’t hold democratic values.” – Javier Milei, President of Argentina

“It would be a grave mistake if Argentina were to cut off ties with great powers such as China or Brazil. China is Argentina’s important trade partner.” – Mao Ning, Chinese foreign ministry spokesperson

“The potential for Argentina leaving the Chinese tent is very troubling to Beijing geopolitically, as it cuts against the trend of China’s takeover and growing influence in the Americas over the last several years. Beijing’s worry is that Argentina and Milei could begin a reversal [of those gains]. Hence we are going to see both ‘hard’ and ‘soft’ approaches coming out of Beijing in an attempt to keep Argentina in line.” – David Day, head of Global Risk Mitigation Foundation

"This interdependence we have with China is irreplaceable. We cannot replace it now with the US or Europe. [Milei's administration should] try to understand better what China represents and how Chinese diplomacy works, because there will be a lot of trouble ahead if this is not properly addressed"." – Patricio Giusto, director of the Sino-Argentine Observatory

Good Reads:

Argentina formally announces it won't join the BRICS alliance in Milei's latest policy shift (WP)

Argentina formally rejects BRICS membership (DW)

BRICS to Grow as Saudi, Iran, UAE, Egypt, Ethiopia Join Ranks (Bloomberg)

Argentina announces that it will not join BRICS bloc (Al Jazeera)

China suspends US$6.5 billion currency swap agreement with Argentina, reports say (SCMP)

Argentina Not Joining BRICS Despite Xi’s Personal Letter to Milei (VOA)

Brics: What is the group and which countries are joining? (BBC)