Valdai Club

On June 13-14, 2019, the Council of Heads of State of the Shanghai Cooperation Organisation (SCO) met in Bishkek. The leaders of the SCO member and observer states arrived in Kyrgyzstan, including Indian Prime Minister Narendra Modi and Pakistani Prime Minister Imran Khan; this was their first meeting since the escalation of the armed conflict in Kashmir in February. Islamabad’s decision to open its airspace for the flight of the Prime Minister of India can be considered a positive signal.

Traditionally, certain issues are discussed within the framework of the SCO, including economic and security cooperation, the fight against terrorism and drug trafficking, and cultural interaction and exchanges. However, in Bishkek, at the initiative of the Chinese delegation, the focus was on the economy. This was not accidental, as Beijing is concerned about the trade wars that have been unleashed by the Trump administration, not only against China and Mexico, but also against its own allies – the EU and Canada. Moreover, the summit took place against the background of unprecedentedly stringent financial and economic sanctions against Iran, the aggravation of relations with Turkey over the latter’s purchase of Russian S-400 anti-aircraft missile systems, and the serious, ongoing US- Russia confrontation. As Chinese President Xi Jinping noted on the eve of the summit, “the creation of the SCO was not directed against outside countries,” but the current situation forces us to consider the trade friction between China and the US within the framework of the “SCO family”.

The Ukrainian crisis has significantly aggravated Russia’s relations with the West in military and political terms, as well as with respect to the financial sector and the economy. Its consequences for Moscow would be far direr if Beijing did not support the idea of ​​building the Power of Siberia gas pipeline and wasn’t taking part in the implementation of a number of other big projects on the territory of the Russian Federation. In the past two years alone, China has provided various types of loans to Russian state and private structures totalling about $60 billion. By the end of 2018, bilateral trade exceeded $108 billion. Now it is time to support China, which has suffered huge losses from a significant reduction in trade turnover with the USA, by expanding the transit potential for Chinese goods (including through the Northern Sea Route) and localizing the production of some of them in the Russian Federation. The most important thing is that the confluence of the Eurasian Economic Union (EAEU) and the Chinese Belt and Road initiative has made it possible to avoid a collision of economic interests between Moscow and Beijing in Eurasia. The SCO deserves certain credit for this, as a platform for coordinating various points of view, primarily within Central Asia. This topic is reflected in the final documents of the Bishkek (2019) SCO summit. As a result, Beijing will get the political support it needs on the eve of the Sino-US summit on the sidelines of the G-20 meeting in Osaka.

Much can be expected from bilateral meetings between Indian Prime Minister Narendra Modi, who had his mandate renewed in the parliamentary elections of April – May 2019, and Russian President Vladimir Putin as well as Chinese President Xi Jinping. In the framework of further strengthening the Russian-Indian privileged strategic partnership, the signing of a free trade area agreement (FTA) between the EAEU and India is possible in the second half of 2019 or in the first half of 2020. This will allow Russia to increase exports to India of raw materials, grain, fertilizers, chemical products and equipment and, at the same time, increase imports of pharmaceutical products. Such an FTA is urgently needed by our countries, as it will significantly expand the economic foundation of bilateral relations. Of course, during the meeting, traditional areas of cooperation were also discussed: space, military-technical cooperation, and the construction of Russian power reactors in India. New Delhi hopes that Moscow will continue to contribute to the normalisation of India-China and India-Pakistan relations, including within the framework of the SCO. For its part, Russia is interested in forming a new core of the SCO, involving India in order to prevent Chinese domination in this organisation. The current formats of interaction between Russia, India and China (RIC), the SCO and BRICS, contribute to this.

Sino-Indian relations are developing in a mostly positive direction. In August 2018, a landmark meeting between Prime Minister Narendra Modi and Wei Fenghe, Minister of Defence and member of the State Council of the People's Republic of China, took place in New Delhi. This means a military rapprochement following the tension around the Doklam plateau (the junction of the Indian state of Sikkim, the nation of Bhutan and Tibet Autonomous Region in China) in the summer of 2017. At the same time, there are still serious contradictions between the two countries. First, although both countries are the most important trading partners for each other, Indians are extremely concerned about the trade imbalance favouring China. Second, the PRC has encroached upon areas of traditional Indian influence: Sri Lanka, Myanmar, Nepal and Afghanistan. Third, China’s political influence and military presence in the Indo-Pacific Region is growing. The SCO acts as a convenient platform for working out related contradictions.

The enlarged dialogue between the members of the “SCO family” will continue in Dushanbe, which will host, on June 15, 2019, the 5^th summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) bringing together 27 states within Eurasia. Another eight states and eight international organizations, including the UN, have observer status. SCO is a partner of this forum. The focus of this event will be on economic stability and security. The meeting between Vladimir Putin and Tajikistan’s President Emomali Rakhmon will take place on the sidelines of the CICA.

Thus, the SCO summit in Bishkek convincingly showed that the role of the SCO in solving not only regional, but also global problems is gradually increasing. The admission of India and Pakistan into the Organisation changed it qualitatively, but it will take considerable time to adapt the new members and form a new SCO core with Russia, India and China. The Bishkek summit was an important step on this difficult path.