Both nations have been approved to become full members of the regional security grouping led by Russia and China.
Two days of summits in the Russian city of Ufa have been held up as proof that Russia is not without allies in the world. Both India and Pakistan will join the Shanghai Cooperation Organization, and Putin hailed their accession as evidence of the emergence of a “multi-polar” world, according to Reuters.
The ExodusPoint Partners International Fund returned 0.36% for May, bringing its year-to-date return to 3.31% in a year that's been particularly challenging for most hedge funds, pushing many into the red. Macroeconomic factors continued to weigh on the market, resulting in significant intra-month volatility for May, although risk assets generally ended the month flat. Macro Read More
Further evidence of shifting geopolitical situation
The SCO met a day after a summit of the BRICS countries, a grouping which India is also part of. The summits are sure to have pleased Putin, who insists that a multi-polar world is emerging to counter the U.S. vision of a world dominated by Washington.
“The evolution of the SCO is taking place at a complicated stage in the development of international relations and amidst the emergence of a multi-polar world,” the group declared. “These processes are accompanied by increasing security challenges and threats, increasing uncertainty and instability in various regions of the world.”
As well as Russia and China, the former Soviet republics of Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan are also members of the SCO. Moscow is keen for the organization to play a major role in the region, and believes that it is one way of encouraging closer relations with Beijing, but has so far been frustrated by the lack of progress.
SCO could play important role in regional politics
This latest round of summits offered encouraging signs for Putin, with greater unity on show between the SCO and BRICS countries, which set out plans for maintaining economic stability, launched a development bank and agreed to set up a currency pool.
According to Indian Prime Minister Narendra Modi, the expansion of the SCO should be a “springboard” for it to play an important role. “The time has come to reach out across the region,” Modi said. “We have everything we need to succeed.”
“Our membership of Shanghai Cooperation Organisation is a natural extension” of the bilateral relationships with member countries “and mirrors the region’s place in India’s future”, he said.
Modi believes India’s membership “will also promote peace and prosperity in this vast region that has often been called the pivot of human history.”
Pakistani Prime Minister Nawaz Sharif said: “President Putin’s efforts will enhance the political and economic scope of the Eurasian belt.”
Tensions between India and Pakistan may be reduced
It is also hoped that the accession of India and Pakistan to the SCO may help to ease the tensions between the two nuclear-armed neighbors. A separate meeting between Sharif and Modi led to plans for Modi to visit Pakistan next year.
Modi offered India’s cooperation in improving connectivity, fighting the war on terror, and driving trade by reducing tariff barriers. India has been an observer in the SCO since 2005, and will now become a full member by next year.
One motivation for Pakistan and India to join the group may have been the membership of energy exporters Kazakhstan and Russia.
“India is particularly interested because it lacks direct access to Central Asia, and it sees SCO membership as a way to get a better foothold on the region. SCO membership could better position India to benefit from Central Asia’s gas riches,” said Michael Fugleman, senior program associate for South and Southeast Asia at the Wilson Centre in Washington.
Fugleman specified that membership did not mean that Pakistan or India would come to dominate the group. “In (the) SCO, India and Pakistan wouldn’t be dominant powers – China and Russia would retain that title,” he said.
Potential for further growth
Another country which has sought membership of the SCO is Iran, but its membership depends on an agreement being reached in the ongoing P5+1 negotiations related to its nuclear program.
Should Iran become a member in the future, the SCO would control approximately 20% of global oil reserves, and represent almost 50% of the world’s population. The BRICS countries represent 20% of global economic output, and around 40% of its population.
Russia’s membership of both groupings goes to show that Moscow is not isolated on the global stage. Putin also uses Russia’s membership as proof that the country is not suffering due to Western economic sanctions imposed as a result of the crisis in Ukraine.
As a previous article on ValueWalk explained, Pakistan and India have fought three major wars since 1947. Recent events led to an increased threat of renewed conflict between the two neighbors, but it is hoped that membership of the SCO will mitigate tensions between New Delhi and Islamabad.