UFA AND BRICS-SCO Connection Eurasia-Indian Ocean Nexus

Cover Story

Any effort to understand the logic of BRICS must begin by recognising the duality of its overlapping northern (SCO) and southern (IBSA) emerging powers agendas

The new Eurasian-based suborder came alive in Ufa at the beginning of July. It will be confirmed in 2016 when the process of full membership for India and Pakistan is completed and extended to post-sanctions Iran. Thus, the moot point: did Russia’s hosting of the 7th BRICS summit jointly with the 15th summit of the Shanghai Cooperation Organisation (SCO) underline the uniqueness of the ‘BRICS conundrum,’? Also, how on its own, it cannot usher in the ‘new world order.’ To do that, the name of the game is not purely ‘economics.’ It is ‘geopolitical economics’; that is, geopolitical economy within a defining strategic landscape.

This framing is informed by a sense that any effort to understand the logic of BRICS must begin by recognising the duality of its overlapping northern (SCO) and southern (IBSA) emerging powers agendas. Russia hardly qualifies in historical, contemporary and demographic terms as an ‘emerging power.’ Yet, the salience of the north-south duality of BRICS is reflected in this author’s edited volume, Laying the BRICS of a New Global Order: From Yekaterinburg 2009 to eThekwini 2013 (2013, Africa Institute of South Africa). It differentiates BRICS into two geopolitical zones: ‘The Shanghai Cooperation Dimension’ and ‘The IBSA Trilateral Dimension.’

In imagining a BRICS-related ‘conceptual scenario’ in 2012, the following forecasted speculation was ventured: “Given its multiple geo-strategic possibilities, BRICS appears to be at the cutting edge of the way in which a new global power balance arrives at equilibrium between different centres of regional integration. SCO dynamics may be emblematic of the stakes involved to the extent that an SCO economic space might constitute a ‘game changer’ in the west-to-east global economic shift. Then, the SCO might indeed live up to some estimations of becoming a counter-balance to a Western alliance attempting to revitalise itself, a sort of ‘counter-NATO’.

But this prospect may be contingent on two developments. First, there may have to be an accommodation within the SCO of Russia’s reintegration of its ‘near abroad’ via the common Eurasian economic space. Second, there must be a resolution of the Iran nuclear standoff as facilitative of Iran as well as India and Pakistan becoming full-fledged SCO members – assuming that resolution of the Iran conundrum serves as a pretext for Beijing to face-savingly drop its resistance to India’s transition from middle power to a great power status within this regional context.

India might then, potentially, become the linchpin between reconfigured northern and southern hemispheres in a new global balance. This may be New Delhi’s ultimate comparative advantage if it can overcome its Sino-inferiority complex. This would see the SCO fulfill its potential, with India becoming a full member while engaging Beijing with greater confidence within the RIC inner core of BRICS. India, in conjunction with South Africa and Brazil, would also have to become geo-strategically proactive in shaping converging Indian Ocean and South Atlantic maritime subsystems…”

BRICS-SCO-EEU

The joint BRICS-SCO summit with Eurasian Economic Union (EEU) participation at Ufa marks a major consolidation of this terrain with the SCO resolving to commence India and Pakistan’s accession to full membership from observer status. This should

prompt reflecting on the 2009 environment that formed the backdrop of BRIC’s founding in light of the current Eurasian context of the recently concluded Ufa joint summit. After all, it was the Sino-Russian calculus underpinning the SCO at its 2009 inaugural summit that formed the geopolitical impetus to the launching of what, then, came into being as the BRIC Forum.

As BRICS, this northerly Eurasian strategic landscape emerged even more sharply into resolution as the overriding conditioning factor in the run-up to Ufa 2015 as prelude to what has to go down as an historically watershed SCO summit on the cusp of a realigning balance of power in trans-Eurasia; this at a time of northern transatlantic crisis in Europe’s eurozone currency union. As such, the output and implications of BRICS-Ufa must be evaluated in relation to the outcome of perhaps the most consequential SCO summit to date – especially since the subtext of it all is a counterbalancing of an infirmed US-led NATO-G7 alliance.

For New Delhi, these implications are especially momentous. They challenge India’s identity quest for recognition as a ‘great power’ now that its full-fledged affiliations cut across three mini-lateral platforms in addition to BRICS: IBSA, the Russia-India-China (RIC) triangular ministerial and now the SCO. This transforms the latter, non-military bloc though it is, into a virtual peer status with NATO. Thus, reflecting on what emerged from Ufa cannot be assessed simply in terms of BRICS, but must factor in the SCO given the conflicted dynamics of the Moscow-Beijing-Washington triangle and its global geopolitical resonance – including what was the Iran nuclear ‘fly in the ointment.’ BRICS-SCO Ufa might, therefore, be summed up as the beginning stages in the consolidating of a new global sub-ordinal geopolitical economy within an increasingly quasi-federalist multi-polar world order, what one report hyped as China’s ‘Silk World Order’ of “trade and integration” converging with Russia’s EEU in the Sino-Russian spearheading of an alternative subsystem to the Atlantic community.

Why this is of more than ordinary importance has to do with the unresolved east-west trans-Eurasian dimensions of the former Soviet-American cold war. This is currently refracted in the crucible of Ukraine and the issue of implementing the Minsk Agreement interacting with other regional tensions: Russo-Iranian backing of an increasingly sectional Alawite Assad regime in Syria interacting with the ambivalent positioning of NATO-allied Turkey; unresolved security contradictions surrounding Afghanistan’s civil war endgame and the role (or potential role) of the SCO and/or the RIC ministerial trilateral. These merge into Indo-Pakistan hostilities over Kashmir and ambivalence in Sino-Indian relations relating to the ‘all-weather’ Sino-Pakistan alliance against India and Beijing’s expansive ‘One Belt, One Road’ continental-maritime initiative linked to its bid for regional hegemony in the East and South China Seas.

Here, an important caveat at Ufa: the meeting between Indian and Pakistani prime ministers on the side-lines of the BRICS-SCO summit facilitated by Russian President Vladimir Putin which allegedly broke ice in what is an otherwise confrontational relationship. Both countries’ national security advisers are set to take forward discussions on a wide range of issues while Indian Prime Minister Narendra Modi accepted Pakistani Prime Minister Nawaz Sharif’s invitation to attend next year’s summit of the South Asian Association of Regional Cooperation (SAARC) in Islamabad. These prospects have been welcomed by Washington as rapprochement between Delhi and Islamabad has to be considered pre-conditional to stabilising South Asia and the Hindu-Kush.

Not only is this in America’s interest. It has to be considered a major SCO priority as well, with both South Asian neighbours being inducted into full-membership. What isn’t clear, from India’s perspective, is whether or not this SCO ‘breakthrough’ compensates for the BRICS resolution on terrorism that reportedly fell short of Delhi’s expectations, no doubt a function of Beijing balancing. Apart from the Indo-Pak conundrum, one cannot work through the complexity of essentially northern Eurasia-West Asian issues animating BRICS-SCO dynamics without also factoring in the increasingly neglected dimension of the southern BRICS trilateral embedded in the IBSA platform.

This dimension factors in the potential for elaborating a complementary Indian Ocean architecture within a southern ocean governance-maritime security framework. Such a prospect, in turn, cannot be separated from the politico-diplomatic sorting out of east-west relations within the landmass of the Eurasian strategic landscape linked to southern Asian dynamics.

RIC Dynamics: Continental-Maritime Equations

In other words, BRICS is animated by two overlapping continental-maritime agendas in the geopolitical economy of what can be considered the ‘Eurasia-Indian Ocean nexus.’ India overlaps both arenas. This makes it the potential linchpin in the BRICS-SCO suborder in the making; it also enables it to partnership with the US and Japan in the Washington-led G7-NATO suborder and, if it so wishes (as it should), cultivate more independently non-aligned relationships with such middle powers as South Africa and Brazil within IBSA (thereby strengthening it as a balancer within BRICS) along with Indonesia, Iran and Australia in the Indian Ocean Rim Association (IORA). Yet Delhi seems unable to sort out a coherently balanced (and balancing) strategy for managing contradictions thrown up revolving around its ‘coopertitionist’ relationship with China. Beijing for its part, seeks to make IBSA redundant amid India’s wavering commitment to it in what may be considered its grand strategy of co-optive hegemony within the continental-maritime Eurasian-Indian Ocean equation.

Similarly, contradictions form the subtext animating the Sino-Russian ‘comprehensive strategic partnership’ overlaying Moscow’s EEU agenda aimed at offsetting Beijing’s leadership leveraging within the SCO. Hence the Kremlin’s geo-strategic dilemma: a regional sphere-of-influence under pressure from the EU in the west (thus Moscow’s Ukraine gambit and support for left and rightwing anti-EU parties flourishing amid a eurozone crisis exacerbated by the Berlin-led northern European austerity agenda) and Beijing’s ‘Orient Express’ bearing down from the east. Bringing the EEU into some of the joint BRICS-SCO sessions reflected a Kremlin gambit at Sino-Russian synergy-building in the coordinated implementing of otherwise competitively integrationist trans-Eurasian strategies. Thus, in different respects, both India and Russia struggle to offset China’s dominance given Beijing’s bid to finance its ‘Silk World Order’ with its Asian Infrastructure Investment Bank (AIIB) alongside the Ufa launched operationalising of the BRICS New Development Bank (NDB) and Currency Reserve Arrangement (CRA).

Moscow and Beijing long differed on the modalities of Central Asian regional development financing. This revolved around the never materialised ‘SCO bank.’ While the Kremlin wanted its already existing Eurasian Development Bank to be the basis of this institution, China preferred a completely new financing mechanism. Hence, the AIIB.

The question is whether Moscow’s bid at consolidating BRICS-SCO-EEU agendas at Ufa amid looming full SCO memberships of India, Pakistan and Iran (with RIC looming in the background) will sufficiently balance China’s leverage in configuring a distribution of power within the emerging new Eurasian suborder that adequately accommodates Russia’s regional aspirations. So we are not just confronted with resolving east-west residual tensions in what has never been a genuinely consensual post-Cold War settlement to begin with. The distribution of power within the evolving eastern suborder is up for negotiation as well. How this dynamic sorts out will determine the overall balance of forces within a transitioning global order; it is one still dominated for the foreseeable future by the western suborder with both Russia and China jockeying against one another in consolidating relationships of strategic utility with Washington.

So how much progress was made at Ufa? Certainly, these Russian concerns are India’s as well. Yet India’s, in addition to its northerly Eurasian issues, have a more southerly trajectory not unrelated to its northern concerns. But before exploring this terrain and India’s southern concerns, it is necessary to briefly review in some detail what emerged out of Ufa in terms of BRICS. Here, in relation to the SCO, BRICS forms the core economic engine of the new geopolitical economy under Sino-Russian construction. As such, BRICS has evolved, since its six years of existence, into an increasingly functionalist mechanism in spite of many commentators discerning it as an emerging counterweight to the West, which it isn’t.

Institutionalising the BRICS Inter-Bank Mechanism: NDB and CRA

The operationalising of the NDB and CRA within the BRICS Inter-Bank Mechanism will be at a fledgling stage of development for some time to come. At Ufa, the new BRICS bank was formally launched and will open its doors in 2016, headquartered in Shanghai. For starters, it will be small in comparison with incumbent development finance institutions (DFIs) and there will be a need to sort out its relationship with China’s AIIB as both will vie for financing major infrastructural projects. Perhaps, the settling on Africa for launching the NDB’s first regional centre, to be headquartered in South Africa, is suggestive of a financing division of labour to be sorted out between NDB and AIIB.

Nor, for that matter, are these institutions likely to operate without cooperating with the World Bank and its affiliates. BRICS and AIIB development financing are not going to be decoupling anti-Western ‘zero-sum’ institutions (especially since most of the G7 have already joined the AIIB and may eventually buy into the NDB as well, though here, priority preference will go to other emerging powers). As is well known, the world is afloat with more than enough development capital in search of ‘bankable projects.’

In fact, this may be where one may determine how independent NDB (and AIIB) will be of western capital in as much as the name of the bankable projects game is ‘project preparation.’ Here, the United Nation’s Office on South-South Cooperation has raised concerns about the absence of autonomous project preparation capacity constituting a major weakness in the repertoire of the NDB. In order to accelerate its track record, it seems likely that the new bank will take over some of the already existing project financing portfolios from the national DFIs of individual BRICS members given the long project preparation lead-time it takes to arrive at bankable projects that can attract development capital investment.

Perhaps, in the interim, the NDB can collaborate with the UN’s South-South Cooperation office in developing project preparation capacity. This, in itself, is a highly contested terrain in terms of social and environmental conditionalities as there has already been major concern raised about the prospect of the World Bank lowering its standards in this regard. As such, it is not clear how strongly these will figure in NDB and eventually AIIB project financing.

When it comes to the Contingency Reserve Arrangement as a mechanism for coming to the rescue of members facing balance of payment emergencies, while it will serve as an alternative to the IMF, it is not clear that BRICS members will be able to rely on CRA totally without the Fund’s participation. According to a South African-based study, CRA would not have sufficient resources to cover balance of payment crises, enabling a government to cover calls on forex reserves. There would still need to be recourse to the IMF such that CRA may not turn out to be the alternative to the Fund’s conditionalities as its billing has suggested.

Nevertheless, from a cooperative multilateral perspective, and the eventuality of BRICS members being afforded the greater decision-making in the Bretton Woods Institutions they deserve, what NDB and CRA – and AIIB – bring to the table should not be belittled. Most observers welcome the additional resources that these new DFIs will generate given the magnitude of global infrastructure demand.

Perhaps, the main point in all this is the demystifying of ideological zero-sum notions of ‘decoupling’ between West and non-West. Given the unfolding scenario within the eurozone, the IMF may be emerging as the ‘federal’ government in a global economy with new DFIs playing major roles. Moreover, if ‘decoupling’ will not happen in the global financial realm, the BRICS-SCO-EEU assemblage at Ufa, interacting with the game-changing Iran nuclear deal, signals convergence between US and Sino/Russian-led suborders. India seems key to how and/or whether and for how long it will take for this agenda dovetailing to happen.

India: In Search of a Role

The challenge facing India, which may determine its regional and interregional leadership prospects and, in the process, the capacity of the SCO to make a difference in stabilising the South Asian landscape, is how Delhi manages its ‘coopertition’ with China in the Indian Ocean, interrelated with its navigating an endgame in its civil war of partition with Pakistan. How this dynamic unfolds is critical to the overall future of the trans-Eurasian project and the possibilities of an east-west equilibrium between suborders. From India’s vantage-point these prospects may hinge on arriving at an outlook transcending preoccupations with balancing China in favour of formulating and implementing an inclusive continental-maritime strategic vision defusing its insecurities and threat perceptions within a calibrating of multiple options contained in its BRICS, RIC, SCO, IBSA and IORA affiliations.

First and foremost, is consideration of a maritime corollary to China’s ‘One Belt, One Road’ strategy. This could involve collaborating with Indonesia, as the leading power in ASEAN, in elaborating an inclusive Zone of Peace and Cooperation in the Indian and Pacific Oceans in tandem with naval cooperation with the US-Japan alliance.

Given Beijing acknowledging India’s special role in stabilising the Indian Ocean (though opposing it as India’s ‘backyard’), this might provide a modus vivendi for exercising Indian leadership in a joint initiative with Jakarta that also factors in Australia and an Indo-African axis with South Africa (within the context of IBSA) in evolving an Indo-Pacific maritime security and oceans governance architecture interacting with a geopolitics of stabilisation on the Eurasian mainland. This latter prospect is the most challenging as it must involve some kind of stabilising detente with Pakistan and resolution of the Kashmir conundrum.

It is, however, one that strongly affects India’s continental-maritime options. Pakistan has refused collaboration in the “overland connectivity” Motor Vehicles Agreement (MVA) between Bangladesh, Bhutan, Nepal and India. Yet, MVA will provide a “seamless movement of people and goods across borders” in what would boost South Asian integration. It will facilitate on-land/off-shore commercial traffic and transactions within the SAARC linked to the BCIM initiative: Bangladesh-China-India-Myanmar.

Might not the Ufa ‘ice-breaker,’ set in train a diplomacy bearing fruit by the time of next year’s SAARC summit in Islamabad, encouraging Pakistan to join in the MVA? If so, perhaps there is a functional cooperation role for the SCO in mediating Indo-Pak polarisation. In the process, this might also moderate China’s ‘divide-and-rule’ compulsions in this regard. Meanwhile, the negotiated ending of sanctions against Iran reinforces India’s strategic options along the Indian Ocean Rim as Tehran invites Delhi to play a bigger role in Chabahar port development in the Iranian southeast opening access to land-locked Afghanistan. With a post-sanctioned Iran in the SCO, this will reinforce regional multilateral pressures driving greater Indo-Pakistan cooperation if not integration – and much-needed strengthening of the SAARC.

Moreover, given the convergence of Sino-Russian and Iranian regional security interests, India and Pakistan, as full SCO members, are sure to face constraints against blocking trans-Eurasian developmental momentum – all of which serve an American strategic devolution agenda (related to ‘nation-building at home’); this is due to prospects for the Iran nuclear deal having opened up new vistas for geopolitical realignments that could very well facilitate an east-west accommodation stabilising the trans-Eurasian landscape (which would have to involve the coming together of an anti-Salafist Levantine ‘entente’ between Iran, Turkey, Saudi Arabia and Israel).

Based on convergent thinking between Russian Foreign Minister Sergei Lavrov and US Democratic party veteran geo-strategist, Zbigniew Brzezinski, one cannot rule out the possibility of an eventual trilateral security arrangement being forged between US-led NATO, Russia’s Collective Security Treaty Organisation (CSTO) and an expanded and beefed up China-led SCO underpinning Beijing’s ‘Silk World Order.’ Were this, in turn, coordinated with an Indian-led zone of peace and cooperation initiative in the Indo-Pacific undertaken with Indonesia, Australia and South Africa, the continental-maritime interfacing of a new suborder complementing the established western system might conceivably become something more than a dream.

Thus, Ufa presents the possibilities considerably larger than the BRICS. In the northern hemisphere the BRICS future is tied to the fortunes of the SCO and the prospects for east-west accommodation. In the southern hemisphere, its future hinges on a reinvigorated IBSA agenda linked to Indo-Pacific peace and security. Calibrating these dynamics will test to the hilt India’s will and imagination to assert a great power leadership role as a prime-time player in the 21st century.

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

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