The Council of Foreign Ministers meeting of the Shanghai Cooperation Organisation (SCO) met in Goa and saw old rivals try to put aside rankling rivalries in an effort to build a more co-ordinated emerging market coalition that can better promote their interests on the geopolitical stage.

The two-day meeting in Goa brought together most of the members of the Asian and Eurasian countries of the emerging BRICS bloc to start working through their own internal rivalries and take more advantage of the economic opportunities that will come from better relations.

The meeting, which wrapped up on May 5, is one of many multinational meetings amongst the emerging markets (EMs) where the Western powers are not welcome and is designed to challenge the US-led “unipolar” hegemony by promoting its members' view of a “multipolar” world.

SCO comprises eight members: China, India, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and Uzbekistan; four Observer States and six “Dialogue Partners”.

Warm Sino-Russian relations 

China and Russia are the leaders of the group along with their BRICS (Brazil, Russia, India, China, and South Africa) colleague India that currently holds the chair of both the SCO and the G20.

In a meeting between Russian Foreign Minister Sergei Lavrov and his Chinese counterpart, Foreign Minister Qin Gang, Russia and China reaffirmed their commitment to improve co-ordination within international organisations and formats such as the SCO, BRICS, the G20 and the United Nations. Russia adopted building up ties with these organisations explicitly as part of its recently released new foreign policy concept.

Beijing and Moscow will jointly "resist all manifestations of hegemony, defend common interests of countries with emerging markets and developing nations, defend equality and justice in the world," Qin said after his meeting with Lavrov.

Building the BRICS+

The meeting was a chance for the SCO to show solidarity and the drone strike on the Kremlin on May 3 that Russia has blamed on Ukraine was condemned by almost all of Russia's partners at the meeting, Lavrov said.

"Almost all of my discussion partners, with whom we spoke yesterday, have condemned [the Ukrainian attack on the Kremlin],” Lavrov said. “In particular, the foreign minister of Pakistan directly condemned the terrorist act and expressed hope that the truth and those responsible for the attack would be established as soon as possible.”

Pakistani Foreign Minister Bilawal Bhutto Zardari’s attendance was especially significant, the first time a Pakistani foreign minister has been in India for nine years. Zardari’s presence triggered speculation that a thaw in the strained India-Pakistan relations may be underway, although the two nations dismissed this.

The host of the gathering, India's External Affairs Minister Dr Subrahmanyam Jaishankar, held bilateral meetings with both China’s Qin and Russia’s Lavrov on the sidelines of the SCO forum. The leaders reviewed bilateral, global and multilateral co-operation. In particular, in August there will be a BRICS summit in South Africa where the members are expected to discuss a mechanism for admitting new members into that organisation. Expansion is on the SCO agenda too, and Belarus and Iran joined the SCO ranks for the first time at the Goa meeting.

The theme of India's Chairmanship of SCO in 2023 is 'Secure-SCO,' and India attaches special importance to promoting multilateral, political, security, economic and people-to-people interactions in the region. This was the second visit to India this year for both Lavrov and Qin, as ties between the leading BRICS nations become increasingly warm.

"The intention was confirmed to strengthen co-ordination activities to develop common approaches within the framework of interaction at the most important international platforms, including the SCO, BRICS, the UN and the G20," a joint statement from Lavrov and Qin said.

Ruble rupee conversion problems

Lavrov also discussed practical problems with his counterpart Jaishankar. As bne IntelliNews reported, India is following Russia’s lead and is trying to de-dollarise but is finding this difficult, as the rupee is only partially convertible, being usually changed into dollars first before being changed into other currencies, which is a problem for Russia.

Russia has climbed 16 positions to become India's fourth-largest trade partner in the 2022/2023 financial year (ended March 31) and the fifth trading partner overall, according to the Indian Ministry of Commerce as cited by Vedomosti. 

The volume of imports of Russian goods climbed from $9.86bn to $41.55bn in the last financial year, largely due to the soaring oil trade. The share of Russia in Indian imports increased from 1.6% to 6.5% in the same period. At the same time, exports from India to Russia amounted to $2.8bn, while the deficit for Delhi thus amounted to $38.74bn.

All imports of goods into India for the corresponding period increased by 16.5% to $714bn, compared with $613bn in fiscal 2021/2022. Exports of goods of the country for the same period amounted to $447bn ($442bn a year earlier).

The problem is that Russia is now earning money hand over fist from selling crude oil to India but is having problems accessing the growing cash pile, as the rupee is not freely convertible.

Some $400mn worth of Russian dividends that belong to Indian companies have been trapped in Russia as a result of these difficulties. Russia has also accumulated "billions" of limited convertible rupees in accounts in Indian banks in trade settlements with India, which it cannot use, according to Lavrov speaking at the SCO summit.

"This is problem. We need to use this money. But for now, these rupees have to be converted into another currency. The issue is being discussed,” Lavrov said, without explaining what alternatives are being considered by Russia and India.

As Russia is now running a very large trade surplus with India it is accumulating rupees, but as it imports so little from India it has no use for those rupees, as India makes little that Russia wants to buy. And as India runs a very large trade deficit, it has not been able accumulate enough foreign exchange to be able to pay fully for its imports from Russia in other currencies.

The day before Lavrov's statements, Reuters, citing Indian government sources, announced the suspension of negotiations on trade in rupees between Moscow and Delhi after the Indian side "tried everything they could to try to make it work."

Another source explained that most bilateral payments continue to be made in US dollars, as well as dirhams and "several other currencies."

Peace plan for Ukraine

During his meeting with Lavrov, China’s Qin reaffirmed China’s willingness to make a practical contribution into the Ukrainian crisis settlement in co-operation with Russia, and the Chinese Foreign Ministry confirmed the country's commitment to assist and promote peace talks. Beijing released a 12-point peace plan on the anniversary of the start of the war in February.

"China will persistently assist and promote peace talks. We are ready to make a practical contribution into the political resolution of the Ukrainian crisis through contacts and co-ordination with Russia," the ministry’s website quoted Qin Gang as saying.

On the same day as the SCO summit, EU foreign policy chief Josep Borrell stated that the EU believed that the “only viable peace plan for Ukraine was the plan put forward by Ukrainian President Vladimir Zelenskiy.”

“Because the Chinese 'peace plan,' well, it's not a peace plan, it's a set of wishful consideration[s], wishful thinkings, but it's not a peace plan,” Borrell said. “The only one [plan] is the one that has been proposed by the Ukrainians, but, certainly, it has not been accepted by the Russians.”

Borrell berated China for supporting Russia, although he noted that the country was not yet supplying Russia with weapons.

Pakistan-India thaw

Progress on building a tighter and more co-ordinated BRICS bloc is moving fast, but there are still a lot of unresolved tensions in the group that are blocking progress.

The arrival of Pakistan’s Zardari was symbolic of the effort that the group of EMs is making to put aside rivalries and work together for their mutual advantage. It is also an example of how the war in Ukraine, and the West’s attempt to force many of Russia’s partners to choose sides, has created an increasingly fractured world.

Zardari's visit to India was the first by a senior Pakistani leader in nine years amid long-standing tensions between the large, nuclear-armed South Asian rivals. However, despite the gesture, there were no plans for Zardari to meet the Indian Foreign Minister Jaishankar separately during his visit.

"During my visit, which is focused exclusively on the SCO, I look forward to constructive discussions with my counterparts from friendly countries," Zardari tweeted before arriving in Goa.

Relations between India and Pakistan have been fraught for decades and they have fought three wars, two of them over the Muslim-majority Himalayan region of Kashmir, which they both claim in full but rule in part.

India concerned over Sino-Russia axis

Relations between Beijing and Moscow continue to improve since Xi was in Moscow in March in an ostentation show of support for Putin and a clear open challenge to Washington’s claim to be the global leader.

"China and Russia have been maintaining active contacts at all levels, promoting co-operation in all directions," Qin Gang said.

"China is ready … to intensify strategic contacts with Russia, to strengthen and deepen co-operation in all areas," the diplomat added after his Lavrov meeting.

Analysts say India is likely to be concerned over Russia’s growing reliance on China as its invasion of Ukraine drags on, as it is heavily dependent on Russia for weapons supplies but has poor relations with Beijing, thanks to their long-standing border dispute.

Indian-Chinese relations have deteriorated since mid-2020, when Chinese and Indian troops clashed along their the long disputed Himalayan frontier and 24 people were killed. The situation has since calmed.

New Delhi’s relationship with Moscow, its Cold War ally, has remained strong. It has failed to condemn the Kremlin for the invasion of Ukraine and has emerged as the largest buyer of Russian crude amid Western efforts to slash Moscow’s oil revenue during its war with Kyiv, defying US pressure to join the international sanctions regime in the process.

However, like Pakistan’s use of the SCO to signal improving relations with New Delhi, Qin’s two visits to India this year also signal that the rivals are attempting to patch up, or at least gloss over, their differences for the sake of creating a set of pan-EM bodies to better co-ordinate their relations with the West.

Jaishankar led a discussion amongst all the foreign ministers, including Lavrov and Qin, to prepare the ground for an SCO summit in India in July at the level of heads of state that will be attended by Russian President Vladimir Putin and Chinese counterpart Xi Jinping in person.

Uzbekistan in attendance

Less high-profile, but equally strategically important, Uzbekistan’s Foreign Minister Bakhtiyor Saidov was in attendance at the SCO summit and met with both India’s and Pakistan’s foreign ministers.

"Welcomed FM Bakhtiyor Saidov of Uzbekistan on his first visit to India in this capacity. Appreciated Uzbekistan's strong support for India's SCO presidency. Also recognised our long-standing multilateral co-operation. Confident our bilateral partnership in different domains will continue to grow," Jaishankar said in a tweet after his meeting.

Saidov discussed a broad spectrum of bilateral relations with Pakistan’s Zardari and agreed to further strengthen economic ties and early completion of connectivity projects, in particular CASA-1000, an ambitious renewable energy infrastructure construction project that will bring 1,300 MW of surplus electricity from Central Asia across Afghanistan to high demand electricity markets in South Asia through new energy infrastructure. 

As bne IntelliNews reported, strengthening Eurasian connectivity would also work to balance Russian, Chinese, and Iranian influence in Central Asia and boost trade via the rise of the so-called Middle Corridor that would allow more trade to flow between east and west.

Eurasia has taken on a new importance it has not seen since the days of the Great Game a century ago as the ‘Stans look to tap into the vast consumer markets of South and Southeast Asia, starting with logistics and energy links with Pakistan and then on to India. It is important for Beijing and Moscow too as they attempt to uncork the region bottled up by the instability in Afghanistan. Russia is in the midst of re-orientating its economy from the West to the East and China wants to connect Asia with Europe via land routes with its Belt and Road Initiative (BRI). That makes co-operating and building more intimate ties with Central Asia important to both of them.

Afghanistan 

For Pakistan and India, opening up access to Central Asia’s vast deposits of natural resources, including wheat, oil, gas and metals, is also very appealing. Pregnant with potential, both India and Pakistan became members of the SCO in 2017 to better facilitate relations in the Eurasian bloc. Quelling the instability in Afghanistan is the key to uncorking the region.

Lavrov accused the US authorities of supporting terrorist organisations, including the Islamic State, the East Turkistan Islamic Movement and Al-Qaeda (all banned in Russia), in this country. “There is strong evidence that the US leadership is supporting terrorist groups in Afghanistan that oppose the Taliban. They also do not abandon attempts to introduce their military infrastructure around Afghanistan, in Central Asia,” he said.

Russian and Indian officials discussed several pressing issues during a meeting on May 5, including Afghanistan and Myanmar, which is also lobbying to join the SCO.

The Deputy Foreign Minister of Russia, Sergey Vershinin, and his Indian counterpart, Sanjay Verma, discussed the agenda of the UN Security Council. The Russian Foreign Ministry released a statement on Friday saying that the officials had a comprehensive exchange of views on the relevant issues.

The situation in Afghanistan was also a topic of discussion, particularly given the recent withdrawal of US troops. Both Russia and India have expressed concerns about the potential for the country to become a breeding ground for terrorism.

China's Qin proposed to Pakistani President Arif Alvi that co-ordination be stepped up for the rebuilding of Afghanistan on the day after the SCO summit finished, during a meeting in Islamabad on his way home.

"China is ready to strengthen communication and co-ordination with Pakistan on the Afghan issue and to jointly contribute to the process of peaceful reconstruction of Afghanistan," the minister was quoted as saying in a statement on the ministry’s website.

Myanmar's ongoing political crisis was also discussed. The country has been in turmoil since the military overthrew the democratically elected government in February. The UN has repeatedly called for the release of political prisoners and for the restoration of democracy in the country.

Expanding SCO

And the SCO, like the other non-aligned EM multinational organisations, is expanding. Iran and Belarus were expected to be inducted into the SCO at the New Delhi summit. Kuwait, Myanmar, the United Arab Emirates and Maldives were also granted dialogue partners status ahead of full membership at the meeting.

At the July heads of state SCO summit, Iran will officially receive the status of a member of the organisation. In September 2022, Tehran signed a memorandum of accession, and in November of the same year the document was ratified by the Iranian parliament. 

The Russian foreign ministry added that “the procedures necessary for the admission of Belarus”, which has the status of an observer, are actively underway, and “Bahrain, Kuwait, the Maldives, Myanmar and the United Arab Emirates are joining the SCO cooperation as new dialogue partners.”

Nominally since 2012 Afghanistan (through its now defunct government) has had observer status in the SCO and has been trying to become a full member of the organisation for nine years. Russia invited the participants of the May 5 meeting in Goa to intensify the work of the SCO-Afghanistan contact group. According to Lavrov, the key reason for Kabul's refusal to accept the organisation at the moment is the unclear status of the Taliban regime.

Nobody recognises the Taliban de jure.