Why the Shanghai Cooperation Organization summit in Uzbekistan this week should be important for the West

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Despite China’s ‘zero Covid’ policy blunder and continued barking rumors of disconnection from the US and – most recently – Germany, China is marching on conquering Central Asia as one of its main investment posts.

Meanwhile, Europe can barely pay its electricity bill.

By comparison, the US is doing fine, barring 40-year high inflation. But China, which claims to have inflation of only about 3%, is not quietly sleeping in the fourth year of the trade war.

Remember, Washington’s plans to portray Beijing as some sort of Moscow enabler failed miserably. Even Brazil’s former president, Luiz Inacio Lula da Silva (and likely next president for the third time), didn’t side with the West when it came to Russia or Ukraine. Equally importantly, India, arguably the most important ally the US has in the region, has turned its back on neither Russia nor China, despite being as aggressive (and in some cases more aggressive) toward China than we are. Remember, India banned TikTok in China in 2020.

And now the whole couple is gathering in Samarkand, Uzbekistan, on Thursday and Friday for the Shanghai Cooperation Organization (SCO) summit. The focus will be on Central Asian development, largely financed by China – with mountains of dirt and earth moved by Chinese mining equipment, computer hardware to power China’s new tech economies, and funding for railways, highways and bridges mostly all from China. .

What is this summit about?

The SCO summit will include China, India, Russia, Iran, Pakistan and all ‘Stan countries, including the event’s host, Uzbekistan. These countries account for half of the world’s population and at least 25% of global GDP. War is unlikely to break out in Ukraine, although Uzbek President Shavkat Mirziyoyev noted that and other implications for commodities trade in an opinion piece published on September 12 in numerous SCO member newspapers, such as The The Bharat Express News. .

“The ongoing armed conflicts in various parts of the world are destabilizing trade and investment flows and have exacerbated the problems of food and energy security,” he wrote, not mentioning Ukraine, the world’s largest armed conflict at the moment. “We are going through a deep crisis of confidence worldwide. Mutual alienation complicates the return of the global economy to its former course of development and recovery of global supply chains,” he wrote, referring to Russia’s isolation in the West and the ongoing rivalry between major powers and China.

Mirziyoyev also mentioned concerns about climate change and the pandemic, admitting that all of these things could hinder growth. This is especially true in countries like his, which is still developing.

The SCO is the largest economic cooperation institution in Eurasia. Think of it as the Organization for Economic Co-operation and Development of Europe. It promotes trade and economic cooperation for its members, as well as connecting them to the larger markets – the US and Europe.

Some of the larger development projects are railways. These are often seen as a way to get Chinese and – ultimately – Central Asian goods to Europe. But even more likely, these logistics investments are aimed at building up the region itself, as opposed to preserving its status as a resource and manufacturing center for Western consumers.

For its part, China wants to sell its manufactured goods in other markets as well. At the moment, China is almost completely dependent on the American and European markets for export.

Some of the major projects include the Trans-Afghan Railway, which links Uzbekistan to Pakistan via Afghanistan. The railway should create alternative transport routes for trade between Asia and Europe.

Other SCO projects include the China-Central Asia natural gas pipeline; the China-Kazakhstan-Uzbekistan railway; a China-Kyrgyz Railway; and the China-Kyrgyzstan-Uzbekistan highway.

“Whether we are talking about the International North-South Corridor, the Chennai-Vladivostok Maritime Corridor or the Northern Sea Route, connectivity will play an important role in the development of our relations in the future,” said Indian Prime Minister Modi in his remarks to September. 7.

The Economic Times reported on Sept. 14 that Modi and Putin will meet on the sidelines of the SCO meeting in Samarkand to discuss multilateral agreements, including the G20, SCO and the United Nations. This is especially important as India will chair the UN Security Council in December and in 2023 India will lead the SCO and chair the G20.

With the US and Europe exiting Russia, Indian retail chains are increasing their presence there.

Russian companies are also watching Indian markets to make up for commercial ties broken as a result of sanctions.

Host country Uzbekistan, for its part, is seeing an influx of Russian IT specialists who have been effectively evicted from Belarus and Russia due to sanctions, and a general bad look for Western companies to be linked to Russian back offices, even if the job is generally considered innocent software engineer outsourcing.

“Uzbekistan is already seeing a big increase in Russian tourists this year and has also attracted thousands of skilled Russians, many of whom can stay on to help develop the technology sector,” Macro Advisory CEO Chris Weafer wrote in a note to clients. June.

Uzbekistan has been on the fast track to modernization since its leader Islam Karimov died in 2016. Karimov was a relic of Soviet times.

“Over the next three years, 620 state-owned companies will raise eyebrows, be up for sale in whole or in part. Of these, about 15 are widely regarded as world-class companies, from Navoi Mining, owner of the world’s largest gold mine, to Uzbekneftegaz, the national oil and gas company and contributor of 15 percent of Uzbekistan’s GDP,” said Fred Harrison, director from communication consultancy Belgrave Europe.

The US is still trying to court Asia in the face of China’s expanding sphere of influence. Their Indo-Pacific Economic Framework is supposed to establish ground rules for trade, but is not a trade deal with tariffs and open markets, something India is not that interested in, let alone most Americans.

However, the SCO continues. It is not a free trade exchange, nor is it a sign that Central Asia is taking sides. It’s not.

But while the West struggles embarrassingly with astronomical energy costs and shifting political power, Central Asia, largely led by China, is growing. It grows in a region that doesn’t really want to fight, despite its own warring factions among themselves. Each country seems to be forging its own path. Uzbekistan and Kazakhstan both want and have good relations with the US (Mirziyoyev met President Trump in Washington in 2018.)

“It is precisely in times of crisis when all countries – whether large, medium or small – must put aside their limited interests and focus on mutual interaction, unite and increase common efforts,” wrote SCO- host Mirziyoyev in his op-ed last week.

Its own country is growing, with GDP expected to reach 3.4% this year, about equal to what the IMF has forecast for China, and bigger than neighboring Kazakhstan. Within the group, India is the most growing and Russia the most troubled by sanctions and the war in Ukraine.

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