The hospital operation announced by President Luiz Inácio Lula da Silva, which is intended to allow Argentina to be granted a credit line from the New Development Bank (NDB), better known as Banco dos Brics, is meeting with strong opposition from the countries involved, according to the bloc Estaoand unlikely to be implemented.
Ready to make “any sacrifice” to help Alberto Fernández’s Peronist government, forced into tight import controls by the country’s low foreign exchange reserves, estimated at just $2 billion, Lula admitted the former President Dilma Rousseff, current head of the bank, is said to guarantee the mission as a “parrot”.
NDB headquarters in Shanghai: Argentina’s Economy Minister Sergio Massa will attend the institution’s governors’ meeting. Photo: DIV
The idea would be to announce the deal at the bank’s next annual meeting of governors, scheduled for the 30th and 31st of this month in Shanghai, which China was supposed to be attended by Argentina’s economy minister, Sergio Massa, and the minister there Fazenda, Fernando Haddad, as well as representatives of the other partners of the institution.
The problem for the deal is that it is not enough for Argentina to become a partner of the bank. As Lula already knows, it is also necessary to change the statutes of the institution, since the NDB was created to finance infrastructure projects for associated countries, and not, as he would like, to provide liquidity loans to third parties.
It is even possible that Argentina will be accepted as a member of the bank at an accelerated rate, thereby trampling on the rite normally used for the admission of new partners. Since it was founded in 2015 by the Brics, a group made up of Brazil, Russia, India, China and South Africa, other countries have joined the FIS, including Egypt, the United Arab Emirates, Bangladesh and Uruguay. But that seems unlikely at the moment, according to the available information Estaothat the amendment to the Articles of Incorporation be approved to allow the release of the loan to Argentina.
Mainly because if the statutes are changed and the transaction is carried out, the original role of the bank will be completely distorted. In addition, a precedent is being set that could lead to new requests of this kind by other members of the institution for the rescue of neighboring countries. India, for example, may feel entitled to apply for loans for Sri Lanka and South Africa for Zimbabwe, who are also struggling financially. Even China, which has given billions of dollars in government loans to developing countries in recent years, may wish to extend them through the FIS in the future to spread the (very high) risk of the operations.
If the proposal to change the statutes is not really successful, the alternative proposed by Lula would be the granting of guarantees by the member countries of the NDB for foreign trade transactions between Argentine and Brazilian companies. However, the maneuver also seems difficult to perform.
In order for this to be viable, each country in the group would have to offer a portion of the required guarantees, and in the case of Brazil, the money would have to come from the same “pie” earmarked for providing Treasury guarantees for lending to states and municipalities in the country. Outside of. In other words, the government would have to give to another country part of the guarantees reserved for the units of the Federation, with internally devastating political consequences. The operation would still give Brazil a competitive advantage in exports to Argentina, something that also seems difficult for other countries that also do billions in business with their Brazilian neighbor to accept.
In order not to leave Argentina saucer in hand, the most likely scenario is that China is considering providing direct aid to the country in isolation, but asking for something in return, such as using some of the money to pay for importing Chinese products .
As can be seen, the attempt to put the Banco dos Brics and Brazilian diplomacy and state structure at the service of Argentina symbolically reveals the distorted view of Lula and his allies on the governance of the institution to be attempted to help Fernández’s “friendly government”.