Implications of the Ufa BRICS and SCO Summits

20.07.2015

BRICS and the SCO are focusing on future development, and therefore have made medium and long-term predictions and arrangements in relation to these groups, which is a natural result of regional cooperation directed by states.

In the long run, the Ufa summits could be considered a landmark moment in the long process of regional cooperation. 

For the Ufa summits, they can’t likely be understood from the perspective of only the Eurasian region because, be it the BRICS countries or the Shanghai Cooperation Organization, their core members are, above all, representatives of emerging economies. As a result, their future development won’t be possible without close ties to the changing global situation. Incidentally, there are at least two global political and economic trends directly associated with BRICS and the SCO.

A prominent change has been a recent speeding up of the construction of a regional cooperation organization — one that is dominated by developed Western industrial countries based on so-called “high-level market cooperation” with obvious geographical segmentation. As for the Trans-Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP), despite their future difficulties, the authorization of U.S. rapid legislation internally seems to promote the above-mentioned negotiations. Moreover, while the Ufa summits were being held, the establishment of a “comprehensive partnership” between the United States and Vietnam also foreshadows the future diversity of global and regional cooperation.

In this sense, the deal is conducive to the West’s overall role in future regional competition and cooperation with Eurasian countries and the countries representing global emerging economies in order to enhance cooperation and develop mutual economic linkages.

This progress in the West’s overall role is not intended to repeat a cold-war-style confrontation, nor is it intended to play a zero-sum game for regional segmentation; instead, it aims to seek opportunities for moving forward with more extensive cooperation and maintaining a balanced development of regional and global economy based on competition.

The other important trend in global politics and economy is to what extent the recovery, in the wake of the financial crisis, affects the future development of emerging economies. The repeated delay of the Fed’s terminating the quantitative easing (QE) policy implies that the developed industrial countries of Europe and America are still worried about instability in recovery process and their judgment of future prospects is still quite uncertain.

Furthermore, both the domestic and external challenges that almost every emerging economy and developing country within the SCO and BRICS has encountered lately, imply that the stable recovery of the global economy and the financial system can only rid itself of dilemma through deepening cooperation, in order to realize their role as an engine for advancing the world economy. Furthermore, once the U.S. has stopped its policy of QE and is showing strong growth momentum, it may pose greater challenges to emerging economies. Therefore, the current value of the Ufa summits is the focus on planning ahead and deepening cooperation in order to meet these challenges.

Meanwhile regionally speaking, there are also two important trends worth paying attention to.

First, a series of Eurasian countries recently put forward their own concepts and strategies for the development of this region. This includes the Russian Eurasian Economic Union concept, Kazakhstan’s “Bright Road” Initiative, Mongolia’s “Steppe Road” program, and China’s “One Belt, One Road” initiative, in addition to many other concepts. In order to achieve all these strategies, plans, and concepts (which reflect the development concepts and regional reality of each nation involved), all related parties urgently need to strengthen their mutual coordination and cooperation, deepen their communication with one another, step up consultations, complement one another, and work collaboratively. Only in this case can all these concepts for regional development really have a positive, long-term effect on promoting stability and development within this region.

Second, in terms of the long process of regional development, the domestic political and economic transition of the major countries in this region has generally undergone two stages since the collapse of the Soviet Union. The first stage, on the whole, began at the end of the 1980s and in the early 1990s. During this period, the transition leaned towards liberalism dominated by the “Washington consensus”. This stage included privatization, marketization, political democratization, and so on.

The second stage, generally speaking, began at the beginning of the new century. This is a period of adjustment and improvement, carrying over both positive and negative consequences from the liberalism line of the previous stage. During this stage, new trends appeared in some of the major countries within the Eurasian region — especially in China, Russia, and Kazakhstan — on the road to modernization, including each country growing stronger through economic development, the elevation of the role of state-run sectors in national economy, as well as an increase in the importance of state subjectivity in both domestic and external affairs.

After experiencing these two stages — from the financial crisis in the beginning of the new century to the current Ukraine crisis — and a series of rapid global and regional changes, the main countries within this region will probably enter into a new stage of transition. The forthcoming stage requires the continuation of highlighting and enhancing national macroscopic dominance and regulation, both in terms of internal complex transitions and external exchanges, so as to improve the level of national governance. In fact, without this, it would be difficult to carry on with any transition, reform, or modernization.

Nevertheless, in the meantime, it is imperative to further increase the role of the market and put all positive factors in all aspects and social classes in motion, improving the level of political civilization and democratic decision-making along with strengthening the construction of the legal system.

Seemingly, it may be a new stage that is different from the previous phase of internal transition. To some extent, the possible future scenario could be embodied by the following aspects: the President of Kazakhstan carefully making preparations for the comprehensive reform of five fields after the presidential election this year; Russian elites thinking about the “political economics of the crisis”, namely, exploring the path of survival and development through further reform and opening up; China, under Xi Jinping and Li Keqiang, emphasizing the importance of state construction, building national consensus, on the one hand, and advancing new reform ideas for effectively increasing the basic role of the market and reducing unnecessary state intervention, on the other.

Of course, it is far from easy to both strengthen national regulation and give fluidity to the market and social forces. In addition to strategic coordination and balance within the internal development process, another necessary step for both developing and transitioning countries in the Eurasian region seems to be cooperating with each other, creating a good international environment for domestic reform, striving to further push domestic reform forward through “reversal to openness”, opening up to both Western countries as well as developing, transitioning ones.

According to the preliminary results of the Ufa summits, both BRICS and the SCO are focusing on future development, and therefore have made medium and long-term predictions and arrangements in relation to these groups, which is a natural result of regional cooperation directed by states. Moreover, as far as the scale is concerned, the accession of both India and Pakistan may bring new impetus to the SCO, especially opportunities in South Asia. At the same time, the SCO may also provide opportunities for the development and a harmonious co-existence of these two countries in the future. From the perspective of quality, institutional settings such as the BRICS New Development Bank and the Contingent Reserve Arrangement, in addition to the gradual implementation of multilateral mechanisms, such as the China-Mongolia-Russia trilateral talks, prove that Eurasian regional cooperation can be expected to forge a new path.

The new road implies that the related parties are pursuing a new model of external development without confrontation, conflicts, or intervention in internal affairs, and are striving to achieve a harmonious coexistence among diverse paths. Moreover, they also hope to resolve the crisis and promote the enhancement of internal governance. This may be the world’s most important takeaway from Ufa summits. 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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