Iran and Russia nip at US global dominance

At conference in Siberia, leaders of Russia, China, India, and Iran float idea of new 'supranational' currency. China offers $10 billion to neighbors.

The "age of empires has ended" and the "international capitalist order is retreating," declared a beaming Mahmoud Ahmadinejad on Tuesday, speaking in the Siberian city of Yekaterinburg before an audience that included the top leaders of Russia, China, and India.

Experts are debating why Iran's controversial president chose to address the summit of the Shanghai Cooperation Organization (SCO), a regional grouping led by Russia and China – of which Iran is only an observer – even as he still faces mass protests and sharp questions at home over his deeply disputed election victory last week.

Some argue that Mr. Ahmadinejad selected exactly the right forum in which to make his case. The six-member SCO, founded in 2001, has grown rapidly into a key political and economic alliance, which has successfully moved to oust United States military bases from member states Uzbekistan and Kyrgyzstan, and is angling for a much wider role in regional affairs.

The group comprises Russia, China, Uzbekistan, Kyrgyzstan, Tajikistan, and Kazakhstan. India, Pakistan, Iran, and Mongolia attend meetings as observers.

"The SCO is evolving into a kind of organization for countries that feel themselves excluded from the global system, who feel victimized by the US-dominated unipolar order," says Alexander Dugin, who heads the right-wing International EurAsian Movement, an influential group of Russian businessmen, intellectuals, and officials. "Now this unipolar world is being shaken to its foundations by economic crisis and imperial retreat, and it's time to define a new project of a multi-polar world."

Never mind Iran's troubles at home

In a closed-door meeting with Russian President Dmitry Medvedev Tuesday, Ahmadinejad is thought to have explained his position on the controversial elections. Deputy Foreign Minister Sergei Rybakov later told journalists that Iran's elections are an "internal affair," adding that "we welcome [Ahmedinejad] on Russian soil and see it as symbolic that he made his first visit to Russia. This allows hope for progress in bilateral affairs."

Members urge non-dollar currency

At the SCO summit, and a subsequent Yekaterinburg meeting of the leaders of the emerging BRIC economic tigers – Brazil, Russia, India, and China – Mr. Medvedev pressed his case for a "supranational currency" to replace the US dollar in global economic transactions and called for greater employment of local currencies in trade among SCO members.

"There can be no successful global currency system if the financial instruments that are used are denominated in only one currency," Medvedev said. "Today this is the case, and that currency is the dollar."

At the summit, China offered $10 billion in aid to crisis-stricken Central Asian states. That comes on top of $7.5 billion Russian assistance package pledged last winter to regional states. Critics argue that such help often comes with political strings attached, as when Kyrgyzstan ordered the US to vacate its military airbase at Manas just hours after being granted $2 billion by Moscow in February.

"Central Asian countries are very pragmatic. They judge their partners on the basis of what they are doing," says Gennady Chufrin, a foreign policy adviser to the official Russian Academy of Sciences. "China and Russia are doing a lot. Compared with a decade ago, Russia is far more active, in a tangible way, in helping to deal with the economic weaknesses of central Asian countries."

Anti-American aims?

But most Russian experts deny there's anything anti-American about the SCO, and insist that it will never develop into a military alliance, despite frequent and sometimes large-scale joint war games among its members.

However, they argue that the SCO should be part of any future settlement in Afghanistan, where US-led NATO forces are battling a resurgent Taliban, since Russia and its central Asian allies are already suffering from an upsurge in drug trafficking, and will be the first victims of exported Islamist militancy if Afghanistan descends again into chaos.

"At this stage, while the Americans are still trying to find an honorable exit from Afghanistan, we are prepared to help," says Mr. Chufrin. "But we want to participate in shaping the outcome. It's not that we're pushing the Americans, but they will leave eventually, so better to work together now for the best possible settlement."

Rivalries could sink group

But despite the rhetoric of newly emerging powers preparing to eclipse the old West – summed up in Ahmedinejad's bombastic speech – don't look for the SCO to become a "NATO of the East" anytime soon.

"The SCO is a forum for Russia and China to manage their competition, but it will run into crisis if it tries to grow," says Alexei Mukhin, director of the independent Center for Political Information in Moscow. "Their national interests do not align, and both want to be the leader."