P R 171004Z JUN 09
FM AMCONSUL YEKATERINBURG
TO AMEMBASSY BEIJING PRIORITY 
AMEMBASSY BISHKEK PRIORITY 
AMEMBASSY BRASILIA PRIORITY 
AMEMBASSY DUSHANBE PRIORITY 
AMEMBASSY ISLAMABAD PRIORITY 
AMEMBASSY MOSCOW PRIORITY 
AMEMBASSY NEW DELHI PRIORITY 
AMEMBASSY TASHKENT PRIORITY 
AMEMBASSY ULAANBAATAR PRIORITY 
SECSTATE WASHDC PRIORITY 1293
AMEMBASSY KABUL PRIORITY 
AMEMBASSY ASTANA PRIORITY 
INFO AMCONSUL ST PETERSBURG 
AMCONSUL VLADIVOSTOK 
AMCONSUL YEKATERINBURG

UNCLAS YEKATERINBURG 000036 
 
 
E.O. 12958: N/A 
TAGS: PREL PARM ECON EFIN RS
SUBJECT: SCO AND BRIC SUMMITS IN YEKATERINBURG:  ECONOMIC 
COOPERATION, CHINESE LOANS, NON-PROLIFERATION, AND MULTIPOLARITY 
 
¶1. Summary:  Meeting in Yekaterinburg July 15 and 16, members of 
the Shanghai Cooperation Organization (SCO) and the world's 
biggest emerging markets (BRIC - Brazil, Russia, India, China) 
demanded a greater say in the global financial system.  Leaders 
stressed the need to reflect a multipolar reality in 
international institutions, and the importance of regional 
approaches to resolving global problems.  Leaders supported the 
Nuclear Non-Proliferation Treaty and U.S.-Russian talks on 
strategic arms control.  The BRIC meeting notably did not result 
in a move to establish additional reserve currencies.  India and 
Pakistan met together on the margins.  End summary. 
 
¶2. Yekaterinburg, a city of one million residents in the heart 
of the Urals region of Russia, hosted around 3,000 guests for 
the Shanghai Cooperation Organization Summit and the first 
summit of BRIC leaders.  Security was heavy as President of 
Russia Dmitriy Medvedev, President of Tajikistan Emomali 
Rakhmon, President of Kyrgyzstan Kurmanbek Bakiev, President of 
Kazakhstan Nursultan Nazarbaev, President of Uzbekistan Islam 
Karimov, President of China Hu Jintao, Secretary General of the 
SCO Bolat Nurgaliev, Prime Minister of India Mahmohan Singh, 
President of Iran Mahmoud Ahmadinejad, President of Pakistan 
Asif Ali Zardari, President of Afghanistan Hamid Karzai, 
President of Brazil Lula da Silva, and First Deputy Prime 
Minister of Mongolia Norovin Altanhuyag arrived.  Ahmadinejad 
did not arrive until Tuesday, citing personal reasons.  Russia, 
China, Uzbekistan, Tajikistan, Kazakhstan, and Kyrgyzstan are 
SCO members while Afghanistan, Pakistan, Mongolia, and Iran were 
invited as observers. 
 
¶3. The summit kicked off with the opening of a Consulate General 
of Tajikistan in Yekaterinburg by the President of Tajikistan 
and Sverdlovsk oblast Governor Eduard Rossel.  The first group 
session, of principals only, began at 5 pm, followed by dinner 
hosted by President Medvedev.  SCO plenary and working group 
sessions, in which observers participated, took place on June 
¶16.  The Yekaterinburg Declaration and a Joint Communique were 
issued after lunch.  BRIC meetings began mid-afternoon on June 
¶16.  President Medvedev and President Hu then traveled to Moscow 
where Hu is beginning a state visit. 
 
SCO Results - Chinese Loans, Economic Cooperation, 
Nonproliferation, New Participants 
--------------------------------------------- -------------- 
 
¶4. The pressing need for deepened economic cooperation to bring 
about recovery from the economic crisis was high on the agenda. 
The leaders agreed to upgrade the SCO's Business Council and 
Inter-Bank Union from mainly bilateral to multilateral 
activities so that member states can better coordinate financial 
and monetary policies to push for growth and recovery.  China 
pledged a $10 billion line of credit for joint economic projects 
within the SCO framework, as well as a $1 billion line of credit 
for Russia's Ex-Im bank equivalent, a portion of which will be 
used to finance infrastructure projects in Sverdlovsk region. 
 
¶5. In both the Yekaterinburg Declaration and Final Communique, 
SCO heads of state pledged greater unity, increased economic 
cooperation, and firm resolve to combat terrorism.  In the 
Declaration, the leaders affirmed that the Nuclear 
Non-Proliferation Treaty (NPT) must be the foundation for 
controlling the spread of nuclear weapons, which can be 
accomplished if all signatories fulfill all their NPT 
obligations.  They welcomed the entry into force on March 21, 
2009 of the Agreement on Nuclear Free Zones in Central Asia. 
Member states also welcomed the beginning of Russian-American 
talks on reductions of strategic offensive arms.   Leaders 
called for reform of the UN Security Council and international 
financial institutions to reflect strength of emerging 
economies, creating a "more balanced and just" world order based 
on international law.  A Convention against Terrorism was signed 
to strengthen the legal framework of SCO countries to combat 
terrorism, separatism, and extremism as well as drug trafficking 
and transnational organized crime.  Problems of money laundering 
and safeguarding energy pipelines were also discussed. 
 
¶6. As member states discussed the SCO's expansion, Sri Lanka and 
Belarus were given the status of dialogue partners.  Uzbekistan 
took over the SCO chairmanship Tuesday, and next year's summit 
will be held in Tashkent. 
 
SCO on North Korea, Iran 
--------------------------------- 
 
¶7. Speaking to the press in Yekaterinburg just before the SCO 
opened, Russian Deputy Foreign Minister Sergey Ryabkov said that 
issues related to North Korea would not be on the agenda because 
"The UN Security Council adopted a sufficiently serious 
resolution on this subject not long ago, therefore we consider 
it excessive to talk about this problem in the current forum." 
However, the subject was raised and member states supported the 
resumption of negotiations on the denuclearization of the Korean 
peninsula.  According to Chinese sources, SCO leaders agreed 
that last month's underground nuclear test by North Korea was 
unacceptable.  On Iran, Ryabkov said that Russia welcomed the 
fact that elections took place and welcomed the new president on 
Russian soil. 
 
Ahmadinejad Criticizes U.S. 
----------------------------------- 
 
In his statement to the SCO plenary on June 16, Iran's President 
Ahmadinejad said that current regional conflicts and the global 
economic downturn have demonstrated that the unipolar world 
dominated by the United States is not viable.  He continued, 
saying that since the U.S. and its allies have not been able to 
cope with the problems, the end has come for the unipolar world 
order.  He criticized the "occupation" of Iraq and urged the SCO 
to lead in efforts to tackle the global financial crisis. 
 
BRIC Avoids Criticism of Dollar 
--------------------------------------- 
 
¶8. At the BRIC summit, Brazil, Russia, India and China called 
for a more diversified international monetary system but avoided 
any explicit criticism of the world's dominant currency, the US 
dollar.  In contrast, speaking to reporters before the opening 
summit session, President Medvedev said that the share of 
sovereign currencies in mutual trade within the Shanghai 
Cooperation Organization (SCO) should be increased to reduce 
dependence on international reserve currencies.  "We must 
strengthen the international currency system not only by 
strengthening the dollar's position, but also by creating new 
reserve currencies and possibly by eventually creating 
supranational payment instruments and means of settlements," he 
said, adding that regional countries could invest in each 
other's financial instruments.  The final statement did not 
contain any references to developing new reserve currencies to 
complement the dollar, saying only, "There is a strong need for 
a stable, predictable and more diversified international 
monetary system."  A reformed financial and economic 
architecture should be based on "democratic and transparent 
decision-making and implementation process at the international 
financial organizations."  BRIC nations urged the international 
community to keep the multilateral trading system stable, curb 
trade protectionism, and stressed a commitment to "advance the 
reform of international financial institutions to reflect 
changes in the world economy."  Brazil will host the next BRIC 
summit in 2010. 
 
But Wants Greater IFI Role 
----------------------------------- 
 
¶9.  At both SCO and BRIC meetings, leaders repeated 
long-standing calls that emerging economies such as Brazil, 
Russia, India and China be given greater representation at the 
International Monetary Fund and the World Bank.  Final documents 
called for broader cooperation in the energy sphere, and 
diversification of energy resources and energy transit routes. 
They also called for a "more democratic and just multipolar 
world order based on the rule of international law, equality, 
mutual respect, cooperation, coordinated action, and collective 
decision making of all states."  This wording reflects a 
longtime call by Russia for a bigger say in global affairs to 
counter the weight of the U.S. 
 
Important Meetings on the Margins 
--------------------------------------------- -- 
 
¶10. Medvedev met with presidents of Afghanistan and Pakistan in 
a new tri-partite format.  Speaking to reporters Medvedev said 
that this new format is useful because common problems such as 
terrorism and transnational crime can be resolved only through 
collective efforts.  Karzai called the meeting the first step to 
broader cooperation in resolving common problems and increasing 
trade and access to regional economies.  Zardari commented that 
"this mission imposes on us a new responsibility, including the 
fight against terrorism, with that swollen cancer that 
constitutes a threat to my country, for Afghanistan, for our 
countries, and also for the entire world."  Medvedev also had 
one-on-one meetings with President Lula da Silva and Indian 
Prime Minister Singh.  Local press reported that Prime Minister 
Singh and President Zardari also met for the first time since 
the Mumbai bombing. 
 
 
SANDUSKY