Leaders at the Samarkand summit of the Shanghai Cooperation Organization (SCO) have emphasized a long-term global economic shift away from the United States.

A global trend away from using the dollar has been more pronounced in SCO states, with non-dollarized Russia-China trade rising about 50 percent in early 2020 after being 10 percent in 2015.

But the trend has accelerated between at least some SCO states with US and western European sanctions against Russia over the Ukraine crisis. Gazprom, the Russian gas major, last week said China would pay for gas in roubles and yuan rather than in dollars and euros.

An SCO declaration Friday said that “interested SCO member states” had agreed a “roadmap for the gradual increase in the share of national currencies in mutual settlements.” The SCO – comprising China, India, the Kyrgyz Republic, Kazakhstan, Pakistan, Russia Tajikistan, and Uzbekistan – is in the process of admitting Iran.

President Ebrahim Raisi has been more positive about SCO opportunities than predecessor Hassan Rouhani, whose efforts to increase trade with Europe – including bringing energy majors to Iran – were thwarted by the US. In 2018 Washington left the 2105 Iran nuclear deal and imposed ‘maximum pressure’ sanctions that threatened punitive action against any third parties dealing with Tehran.

Thwarting ‘draconian’ sanctions

Raisi’s made his first foreign trip as president to an SCO summit in Dushanbe, Tajikistan, October 2021, when he hailed “a new area” where “unilateralism and hegemony are failing.”

Russian President Vladimir Putin shakes hands with Iranian President Ebrahim Raisi during a meeting on the sidelines of the Shanghai Cooperation Organization (SCO), September 15, 2022

Raisi told the Samarkand SCO summit Thursday the organization needed to improve ways to thwart “draconian” US sanctions. On Thursday, meeting Putin, Raisi stressed the “strategic nature” of cooperation with Russia that could “be developed in the political, commercial and economic fields, as well as in space.” While US ‘maximum pressure’ restricted Iran-China trade after 2018 with Chinese companies wary of punitive US actions, China has remained Tehran’s largest trading partner and is easily its biggest market for crude oil.

In its economic and diplomatic isolation, Iranian officials emphasize the importance of ties with Russia and China, although Moscow has little to offer Iran as both countries face economic hardship and China is happy to buy discounted oil from both sanctioned energy exporters.

Global change

Putin and China’s President Xi Jinping both portrayed the SCO as part of a global change. “Fundamental transformations have been outlined in world politics and the economy, and they are irreversible,” Putin said. The Russian president presented the SCO as half the world’s population and responsible for a quarter of global gross domestic product.

But in fact, Putin’s invasion of Ukraine has led to NATO’s expansion, and more Western solidarity. This is what Beijing has on mind as Putin alluded to China’s concerns over the war in Ukraine during his meeting with Xi on Thursday.

Seven months after the Russians launched military operations in Ukraine, Putin acknowledged unease or reservations expressed by both India and China. “I know your position on the conflict in Ukraine, the concerns that you constantly express,” Putin told India’s Prime Minister Narendra Modi during a televised meeting. “We will do everything to stop this as soon as possible.”

Turkey offers further mediation

Turkish President Turkish President Tayyip Erdogan told the SCO summit Friday that Ankara would continue its efforts to mediate an end to the war “as soon as possible.” He urged the holding of direct talks in Turkey between Putin and Ukrainian President Volodymyr Zelensky, who has said he will never accept a peace allowing Russia to keep any Ukrainian land, including Crimea.

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