Sino-Russian baby comes of age

By M K Bhadrakumar (Asia Times Online)

By the yardstick of Jacques, the melancholy philosopher-clown in William Shakespeare’s play As You Like It, the Shanghai Cooperation Organization (SCO) has indisputably passed the stage of “Mewing and pucking in the nurse’s arms”.

Nor is SCO anymore the “whining schoolboy, with his satchel/And shining morning face, creeping like snail/Unwillingly to school”. The SCO more and more resembles Jacques’ lover, “Sighing like a furnace, with a woeful ballad/Made to his mistress’ eyebrow.” Indeed, if all the world’s a stage and the regional organizations are players who make their exits and entrances, the SCO is doing remarkably well playing many parts. That it has finally reached adulthood is beyond dispute.

But growing up is never easy, especially adolescence, and the past year since the SCO summit in Dushanbe, Tajikistan, has been particularly transformational. What stands out when the SCO’s ninth summit meeting begins in the Urals city of Yekaterinburg in Russia on Monday is that the setting in which the regional organization – comprising China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan – is called on to perform has itself unrecognizably shifted since last August’s gathering of leaders in Dushanbe. First, the big picture.

The locus shifts east
The world economic crisis has descended on the SCO space like a Siberian blast that brings frost and ice and leaves behind a white winter, sparking mild hysteria. The landscape seems uniformly attired, but that can be a highly deceptive appearance. Russia and China, which make up the sum total of the SCO experience, are responding to the economic crisis in vastly different terms.

For Russia, as former prime minister and well-known scholar academician Yevgeniy Primakov observed ruefully in a recent Izvestia interview, “Russia will not come out of the crisis anytime soon … Russia will most likely come out of the recession in the second echelon – after the developed countries … The trap of the present crisis is that it is not localized but is worldwide. Russia is dependent on other countries. That lessens the opportunity to get out of the recession in a short period of time.” [1]

Primakov should know. It was he as president Boris Yeltsin’s prime minister who steered Russia out of its near-terminal financial crisis 10 years ago that brought the whole post-Soviet edifice in Moscow all but tumbling down.

Russia’s economic structure is such that 40% of its gross domestic product (GDP) is created through raw material exports, which engenders a highly vulnerable threshold when the world economy as a whole gets caught up in the grip of recession. But what about China?

This was how Primakov compared the Chinese and Russian economic scenario:
In China too, as in Russia, exports make up a significant part of the GDP. The crisis smacked them and us. The difference is that China exports ready-made products, while on our country [Russia] a strong raw material flow was traditional. What are the Chinese doing?

They are moving a large part of the ready-made goods to the domestic market. At the same time, they are trying to raise the population’s solvent demand. On this basis, the plants and factories will continue to operate and the economy will work.

We [Russia] cannot do that. If raw materials are moved to the domestic market, consumers of such vast volumes will not be found. Raise the population’s solvent demand? That merely steps up imports.

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