SCO links help ease pressure on Russia

Group's importance grows as EU leaders discuss extending economic sanctions

As the European Union prepared to extend its economic sanctions on Russia, the nation has this week been attempting to ease the pressure by firming up its links with fellow members of the Shanghai Cooperation Organization, including China.

The restrictive measures placed on Moscow last year over the Crimean issue are set to expire in January. However, EU leaders were to discuss extending the sanctions by six months on Dec 18.

Analysts say the situation has increased the importance of the SCO for Russia, whose leaders joined those from the five other members of the group - China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - for the 14th SCO Prime Ministers' Meeting on Dec 15.

The meeting, held in Zhengzhou, capital of Henan province, saw leaders vow to push cooperation in infrastructure construction projects to benefit all members. They agreed that transportation infrastructure, shipping facilities, trade, the investment environment, production capacity, advanced technology and financial cooperation are among the issues that need to be prioritized.

Ding Peihua, a professor of Russian studies at the Shanghai Academy of Social Sciences, says the SCO cooperation can help ease the economic pressure on Russia caused by the sanctions.

The EU and the United States introduced the sanctions in July last year, largely targeting Russia's banking, energy and defense sectors. Asset freezes and visa bans were also placed on 149 individuals believed to be involved in the Crimean issue or causing unrest in Ukraine.

The sanctions were to expire at the end of January, a month after the deadline for meeting the terms of a peace deal agreed in Minsk by Germany, France, Ukraine and Russia in February.

Yet while Russia's relations with the EU have become strained, analysts say the resource-rich country has seen cooperation with China grow in the energy sector.

According to Russian media, China Petrochemical Corp, better known as Sinopec, has been given the green light to buy a 20 percent stake in Russian petrochemicals and gas company Sibur.

Anotoly Chubais, the former Russian deputy prime minister, says China and Russia have maintained good trade in energy, commodities and consumer goods. "My belief is that there is huge room for opportunities, and that's in high-tech," he says.

The two countries have been working together in the energy sector for a long time, but only recently have they started to interact about high-tech industries and infrastructure construction, adds Ding at the Shanghai Academy of Social Sciences.

At the SCO meeting, Chinese Premier Li Keqiang said China is ready to boost links between the Belt and Road Initiative and other nations' development strategies, as well as links with mechanisms such as the Eurasian Economic Union.

Li's comments received a positive response from his Russian counterpart, Dmitry Medvedev, who called for closer financial cooperation and proposed setting up a financial mechanism within the SCO.

There are already some experimental projects in renminbi-ruble trade going on at the Moscow Stock Exchange, and Medvedev said countries should explore the possibility of such trade projects and called for an increase in local currency use in trade between SCO members.

Wang Xianju, deputy director of the Institute of Eurasian Social Development, part of the State Council Development Research Center, says the Eurasian Economic Union has also been affected by downturns in the economy and energy market.

As some members overlap, the union and the SCO should interact more, he says, adding: "Pushing the link between Silk Road Economic Belt (part of the Belt and Road Initiative) and the Eurasian Economic Union will meet the needs of all SCO members."

renqi@chinadaily.com.cn

(China Daily Africa Weekly 12/18/2015 page23)