Argentina and the BRICS

Argentina was invited to the recent BRICS meeting that announced a new development bank, which is actually called the New Development Bank (NDB). As Fabiana Frayssinet notes in Argentina Once More on the Map, Invited by BRICS Inter Press Service 06/18/2014, this could mean that the BRICS (Brazil, Russia, India, China, South Africa) might have to be changed to "BRICSA, ABRICS or BRICAS, if Argentina is admitted."

The Buenos Aires Herald reports that Argentine President Cristina Fernández used the opportunity of the BRICS meetings to state her position in defiance of Nixon-appointed zombie judge Thomas Griesa that is trying to push Argentina into bankruptcy at the end of this month (Default by default 07/21/2014):

There her tone was not so much that Argentina would not pay as that Argentina had already paid (remitting the corresponding deposit to New York at the end of last month, which was immediately frozen by Manhattan judge Thomas Griesa) — she further argued that the existing 2005 and 2010 bond swaps favoured holdout creditors because even a starting 70 percent haircut would later permit them profits trebling the outlay on debt bought at junk bond levels of 10 percent. CFK also seemed to assume that there could be no default without one being declared by the government in question and she herself had no intention of taking such a step herself, ergo no chance of default. The substance of this speech hardly differed from her Flag Day declaration of a willingness to "pay 100 percent of bondholders," a pledge prompting the market optimism until recently, but the change of tone has prompted uncertainty.

There is another hearing before the Nixon zombie judge on July 22.

A Mexican economist uses the Argentine conflict with the Nixon zombie judge to illustrate the need for institutions like the NDB (reported by Mario Osava, International Reform Activists Dissatisfied by BRICS Bank Inter Press Service 07/22/2014):

“We want an international system that serves the majority, not just the seven most powerful countries (the Group of Seven),” that does not depend on the dollar and that has an international arbitration tribunal for financial controversies, said Oscar Ugarteche, an economics researcher at the National Autonomous University of Mexico.

"It is unacceptable that a district court judge in New York should put a country at risk," he told IPS, referring to the June ruling of the U.S. justice system in favour of holdouts ("vulture funds") in their dispute with Argentina, which could force another suspension of payments.

"We need international financial law," similar to existing trade law, and an end to the dominance of the dollar in exchange transactions, which enables serious injustice against nations and persons, like embargoes on payments and income in the United States, he said.

"Existing international institutions do not work," and the proof of this is that they have still not overcome the effects of the 2008 financial crisis, said the Mexican researcher.

Major powers like the United States and Japan have unsustainable debt and fiscal deficits, yet are not harassed by the International Monetary Fund (IMF), in contrast to the treatment meted out to less powerful nations, particularly in the developing South.

Tags: argentina, brics, cristina fernández, new development bank