Russia holds the door to Central Asia open for China
Raffaello Pantucci says to a region in need, the Chinese offer of funds and expertise is too attractive to resist, as agreements at the Moscow-hosted BRICS and SCO meetings show
Late last week, the leaders of almost half the world's population gathered in Ufa, Russia. The collision of the BRICS and Shanghai Cooperation Organisation (SCO) summits was orchestrated by Russia to guarantee exposure and attention, and highlight to the world how many friends Russia has. Dig below the shallow surface, however, and the links between the countries of the two international organisations are barely skin deep, with everyone attending for their own reasons.
For China, the two summits provide another opportunity for global engagement, as well as helping Beijing advance two international financial institutions. A timid player in many ways on the international stage, Beijing has found that its capital is one lever that it can use without raising too many hackles, and the meetings in Ufa gave it another opportunity to flex these financial muscles.
Fixating on the slow path to SCO membership for India and Pakistan, the world largely missed the key takeaway from the summits: China's growing financial domination of Russia and its immediate backyard.
In the wake of the first Ufa summit, greater clarity was cast around the BRICS development bank, a new financial entity to emerge from the grouping of Brazil, Russia, India, China and South Africa, with an initial market capitalisation of US$50 billion. The leaders also created a US$100 billion currency exchange reserve, of which US$41 billion was offered by China, while Russia, Brazil and India each gave US$18 billion, and South Africa contributed US$5 billion.
A day or so later, the SCO members agreed once again to try to advance the concept of an SCO development bank or at least a joint fund.
China has been pushing the idea of an SCO financial institution for some time.
Seeing economic engagement as its major advantage in Central Asia, many years passed before Chinese interlocutors first presented the idea of an SCO development bank.