RIC and The New Silk Road

June 28th, 2011
in contributors

silk road by Sanjeev Kulkarni

The continuing economic crisis in Europe and US is slowly changing the the nature of world politics. As realization dawns that Euroland and US can no longer be the engines of world growth, the RIC countries-Russia, India and China of BRICS, are quietly moving towards strengthening economic cooperation among themselves to counteract the moribund western economies.

Follow up:

The three countries are increasingly turning to each other and regional cooperation to further their economic growth.

Russia sees markets for its gas reserves in China which will rival Europe by 2035 with India not far behind.

India and China have started seeing each other more as trading partners rather than rivals.

All three believe that regional cooperation is the key to future growth which is non west centric.

Russia and China: The former allies of cold war era have reaffirmed their resolve to strengthen their relationship.Last year, China displaced Germany as Russia’s largest trading partner. In a land mark decision Russia and China have agreed to settle bilateral trade in ruble or the yuan.

The two countries have set a target of $200 billion in bilateral trade by 2020. A, $1 trillion gas, "deal of the century" was to be signed recently. The people to people contact is significant; an estimated 3 million people from China and Russia now visit each other’s country each year.

India and China : Much has been said of the military rivalry between China and India especially among military thinkers in both countries.

Dismissing the the military and contentious border issue, trade between the two countries has grown significantly. Bilateral trade between India and China surpassed the US$ 60 billion target, reaching US$ 61.7 billion in 2010. Although the trade balance is in favor of China, India is keenly awaiting for China to open its market to Agro-products, Engineering services, Information Technology (IT) and Pharmaceuticals.

China has dropped the staple visa regime and military cooperation has been restarted. The military saber rattling has given to quiet pragmatism. India and China on June 25, concluded week-long defence talks.The Indian military visited Xinjiang , bordering Pakistan. It is at the centre of China's counter-terrorism campaigns.

Significantly both countries have agreed to permit banks of each other countries to open branches and representative offices. A  target of $100 billion in bilateral trade has been set for 2015.

Russia and India: Russia and India have warm ties which go back to cold war era. Russia has so far been India's major weapon supplier. Only recently Russia has lost share of Indian military market to the European and US military aircraft industry. However the cooperation is far from over. The aging fleet of MIG 29's is being upgraded and both countries have agreed to develop light fifth generation for Indian Air Force.

Bilateral trade between the two countries is expected to reach $ 20 billion by 2015 and are mulling over free trade agreement..

RIC: Russia India China

The Shanghai Cooperation Organization (SCO)  formed in 2001 has rapidly evolved from solving military and border issues to encompass regional economic aspirations and growth and has become increasingly an influential multilateral organisation.
The SCO group consist of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Mongolia, Pakistan, Iran and India are observers. Sri Lanka and Belarus are dialogue partners. Both Russia and India are keen that India joins as full time SCO member.

With the increasingly economic and wealth shift from west to east, SCO might play an increasingly significant role and become the modern Silk Route between the RIC's and their neighbors with trade exceeding $300 billion per year by 2015.


About the Author

Sanjeev Kulkarni is an entrepreneur based in Pune, India. He worked for large organizations in board level position before venturing on his own. He is currently involved as an investor in health care software company and as an investor, mentor in an automation company. Very widely traveled, he has experience of working in different geographical areas with people of varying nationalities. He did his BS from Indian Institute of Technology, Delhi.

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