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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.

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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.

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"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."