SCO and BRICS in a Fractured World: India’s Balancing Act in Multipolarity
Against the backdrop of ineffectiveness of the UN in diffusing West Asia and Eurasia conflicts, failure to adopt a global pact on plastic pollution, and over and above all, the rise of unilateral trade protectionism, the China-led Shanghai Cooperation Organisation (SCO) has concluded its two-day (August 31 - September 1) high-profile 25th Summit in Tianjin, China. The Summit has successfully drawn the world's attention for its timing, outcomes, and attendance of world leaders, especially the Prime Minister of India, who visited China after seven years and physically attended after the Samarqand Summit. Is the SCO Summit a 'performative' as the US downgrades it, or contributing substantively in addressing the erosion of traditional multilateralism in global governance?
The Tianjin Summit, immediately criticised by the pro-Western scholars, sends a subtle political message that Chinese President Xi projected himself as a formidable counterweight to the US leadership. In addition, the SCO Summit presents itself in this tumultuous world turmoil, like BRICS, as a ray of hope of a multilateral regional organisation that intends to address the flaws of global governance under the so-called ambiguity of the rules-based order. From the Shanghai Five, formed in 1996 to address border issues among China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan, the SCO, established in 2001 with the addition of Uzbekistan, is now a 10-member group with two observer members and 15 dialogue partner countries (Laos as a new addition). Under the theme 'Advancing the Shanghai Spirit: SCO in Action', the Heads of State adopted the Tianjin Declaration, and the SCO Plus (SCO + dialogue partners) deliberated on 'Turning Multilateralism into Action, Ensuring Regional Security, and Promoting Sustainable Development'. Among the 24 agreements signed during the Tianjin Summit, the approval of establishing the SCO Development Bank is the most symbolic, startling, and strategic move under the Chinese Chairmanship.
After all, what is the rationale behind establishing another MDB initiated by China? The world's second-largest economy, China, has already established the Asian Infrastructure Investment Bank (AIIB), having the single biggest shareholding, and the New Development Bank (NDB), having equal shareholding with BRICS member countries (Brazil, Russia, India, China, and South Africa). In general, the MDBs, a major source of development finance, are public financial institutions that extend loans, grants, technical assistance, and policy advice to member countries. They have tremendous political and economic influence over recipient countries, especially those with poorer economies.
Undisputedly, the oldest and largest MDB, the US-led World Bank Group (WBG) established with the International Monetary Fund (IMF) in 1944 as the Bretton Woods twins, is the mainstay of the world financial structure since World War II. Whereas the US, being the largest shareholder, with other Western countries, controls the governance of the WBG and IMF, hence, both sides of the North Atlantic call the shots in the global economic affairs. Despite several concerted efforts to democratize the developmental decision-making process in global and regional MDBs, including the UN Security Council (UNSC) and the World Trade Organization (WTO), the response has been abysmally low.
Meanwhile, the developing member countries require an estimated 4.3 trillion dollars of development finance per year, including 1.3 trillion dollars for climate actions, to meet the ambitious targets of the Sustainable Development Goals (SDGs) by 20230. It is estimated by the United Nations Framework Convention on Climate Change (UNFCCC) that developing countries require at least 6 trillion dollars by 2030 to meet less than half of their existing Nationally Determined Contributions (NDCs). Can the pledge of annual 300 billion dollars for climate actions, at least, in developing countries, agreed during the 29th Conference of the Parties to the UNFCCC (COP29), be met practically?
At present, the 12 existing MDBs and their 44-odd batteries of bilateral development agencies, with private finances, are insufficient in fulfilling the developmental needs of developing countries and indifferent to reform in the governance of global financial edifices. Last year, ten prominent MDBs, including AIIB and NDB, estimated that they could collectively expand their lending by an additional 300 billion dollars to 400 billion dollars in the next ten years. Still, it's a peanut to the huge shortfall. One of the major arguments in favor of setting up the SDB is fueling the financial needs in the Eurasian region and beyond. Subsequently, the SDB, when it functions, technically will be accompanying the AIIB in expanding Chinese economic influence in the heart of Asia. It is to be noted that while the AIIB was invited, the absence of representatives of the Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), and the WBG is a political message towards the Western-led MDBs. Microscopically, a similar question can be raised regarding the absence of a representative from the NDB, despite Shanghai being its headquarters. In hindsight, it outlines China's own ambition in competing with the US-led global financial architecture.
At the outset, the SDB will focus its operations in the Eurasian member countries of the SCO. The idea of the SDB can be traced back to the Ufa Summit in 2015 of both BRICS and SCO, when the establishment of the NDB was formalised. The SDB will subsequently supplement and complement the Eurasian Development Bank (EDB), an MDB established in 2006 with significant Russian influence, which lends $2.5 billion annually in Eurasia. Interestingly, the EDB carries Chinese as one of the languages, along with Russian and English, despite China being a non-member country. Conclusively, the SDB is a logical extension of the Chinese influence in the region and beyond. The negotiations among members of the SCO, especially for India, on shareholding, headquarters, governance, and operations of the SDB would be strategically difficult if not problematic. The Belt and Road Initiative (BRI) and its major component, the China-Pakistan Economic Corridor (CPEC), which India has been strongly opposing, will be a major friction point of the SDB.
While the world's self-claimed elite industrialised democracies, the G-7, were busy maintaining the status quo in Alberta, Canada, in June, the BRICS Summit in Rio and the SCO in Tianjin both exposed the fallacies of fractured multilateralism that grappled with global governance. On the contrary, nearly four decades of permutations and combinations on multipolarity by ambitious regional power centres have achieved a zero-sum game. Despite severe criticism against the BRICS or the SCO, the member countries have the responsibility and ability to transform the prevailing global disorder into specific stability, predictability, and shared values. During the BRICS Summit, Brazilian President urged that 'if international governance does not reflect the 21st century's new multipolar reality, it is up to the BRICS to contribute to bringing it up to date.'
Whatever the criticism hurled at the SCO, it is undeniable that the Tianjin Declaration has accelerated the momentum agreed at the BRICS Rio Summit. The next critical juncture will be Brazil's presidency of COP 30 of the UNFCCC, as well as the G20 under the leadership of South Africa and India's chairmanship of BRICS in 2026. The COP30 will be a litmus test for the Lula Presidency to bridge the gap between the North and South divides that occurred during COP29 in Baku and uphold the legacy of the UNFCCC as the foremost multilateral process in addressing the global climate emergency, as it did during the Earth Summit in 1992. Above and beyond, the Belem COP will be a head-on collision with the climate change cynic in the American leadership who has already threatened BRICS. With the 'solidarity, equality, sustainability' theme of the G20, South Africa must amplify the equality in representations in the global institutions without even the score of White House intimidations earlier this year.
India will be deviating in various forms, norms, and terms of its last decade of foreign policy strategies to accommodate a delicate balance of its interests in the Northern and Southern Hemispheres. The battle over who is representing the Global South between India and China has already begun in the BRICS, SCO, G20, UNFCCC, and other offshoot regional arrangements. India seems on the back foot, having only leverage in BIMSTEC, as China has both finance and a clear vision, as the latter shows the intent in Tianjin with SDB and Global Governance Initiative.
Instead, the Prime Minister of India strongly called for a new multipolar world and an inclusive world order in the light of the expansion of BRICS with the inclusion of new members in the Rio Summit. Will India carry that mettle of BRICS's multipolarity and polycentric agenda into reality? When the Indian Prime Minister didn't join the virtual BRICS meet called by President Lula on September 8, it is to be understood that India is managing the West and East. However, the obligation lies with India on its part to deliver the pathways to sustaining multilateralism in global governance under its BRICS chairmanship.
In fact, India has not been fairly praised for its contributions to multilateralism, whether in mandatory climate obligations or the adoption of a universal plastic treaty. India's argument remains feeble in formulating and gathering members for the International Solar Alliance (ISA), the Coalition for Disaster Resilient Infrastructure (CDRI), and the Global Biofuel Alliance (GBA) are examples of multilateral institutions. Similarly, India announced in the Rio Summit that it would redefine the BRICS into 'Building Resilience and Innovation for Cooperation and Sustainability' under its presidency. This is an ill-advised proposition that would undermine the vitality of the BRICS, as it appears to be a temporary project. To invigorate BRICS Plus in favour of India, representing the global aspirations of the continents, India must persuade member countries to rename the expanded BRICS Plus as the 'New Development Alliance', aligning with its New Development Bank (NDB) and the government (NDA) at Home, at least.